Debits and Credits are two of the most fundamental accounting terms. A debit, also known as a ‘debit sale’ or ‘debit transaction’, is an accounting transaction which increases an asset or expense account, while decreasing a liability or revenue account. A credit, also referred to as a ‘credit sale’ or ‘credit transaction’, is an accounting transaction which decreases an asset or expense account, while increasing a liability or revenue account. In other words, a debit will reduce cash on hand, while a credit will increase it. Both types of transactions form the backbone of bookkeeping, making it essential for businesses to understand them both in order to make informed financial decisions.