Debits and credits are the backbone of business, which is why it’s important to understand the difference between them. A debit is an entry that adds to the account balance and decreases the cash or asset balance. It increases liabilities, income, and equities. On the other hand, a credit decreases an account balance and increases cash or asset balances. It increases expenses and decreases income, equity, and liabilities. Understanding debits versus credits will help businesses better manage their finances and make more informed financial decisions.