Debit and credit are two of the fundamental building blocks of accounting. Put simply, a debit entry is an amount added to an account while a corresponding credit entry reduces it. When an asset is acquired through a business transaction, its cost is recorded as both a debit to the asset account and a credit to the cash or accounts payable account. In this way, debits and credits are used to track the flow of money in a company’s financial transactions. Together, they help businesses maintain accurate bookkeeping records that accurately reflect their financial position.