Question

Explain the significance of debit in accounting. 

Answer 1

Significance of debit in accounting are as follows:

1. Personal Accounts (Person/Organisation): When the account of a person or organisation is debited, it means either:
   • The person/organisation owes the stated amount.
   • Some amount payable to him has already been paid.
2. Real Accounts (Assets): When an asset account is debited, it shows an increase in the quantity or value of that asset.
3. Nominal Accounts (Expenses/Losses): When a nominal account is debited, it represents that money has been spent or a loss has occurred.

Debit = Increase in assets or expenses; Decrease in liabilities or income.