An Expense Accounts Debit or Credit is an entry to the company’s books that records money spent from the company’s cash reserves. It is a financial transaction and represents either a source of income for a business, or an expense that needs to be paid for by the company. The debit increases the liabilities of the company, and the credit decreases them. This system allows businesses to track their spending, analyze expenses, project outflows versus inflows, and transparency in the accounting process.