Debit or Credit? Why Your Bank Says the Opposite
Debit means left and credit means right. That is the entire definition. Once you see why your bank statement is written backwards, the rest of the rules stop feeling arbitrary.
Updated on 9 min read
Quick answer: debit is left, credit is right
That is the whole definition. Debit does not mean money out, credit does not mean money in, and neither says anything about whether something is good for the business.
Whether a debit increases or decreases an account depends only on what kind of account it is:
| Account type | Normal balance | Increases with | Decreases with |
|---|---|---|---|
| Assets | Debit | Debit | Credit |
| Expenses | Debit | Debit | Credit |
| Drawings or dividends | Debit | Debit | Credit |
| Liabilities | Credit | Credit | Debit |
| Equity | Credit | Credit | Debit |
| Revenue | Credit | Credit | Debit |
Two questions get you the answer every time. What type of account is this, and is it going up or down? The debit and credit checker takes exactly those two answers and returns the side.
Why your bank statement says the opposite
This is the single most common reason debits and credits feel impossible to learn. You deposit money, the bank calls it a credit, but every textbook says receiving cash is a debit. Both are right.
Your bank statement is not written from your point of view. It is a copy of the bank ledger. To you, money in the bank is an asset. To the bank, your balance is a liability, because they owe it back to you on demand.
| What happens | In your books | In the bank books |
|---|---|---|
| You deposit RM 1,000 | Debit Cash (your asset increases) | Credit your account (the bank owes you more) |
| You withdraw RM 400 | Credit Cash (your asset decreases) | Debit your account (the bank owes you less) |
| Bank charges RM 20 in fees | Debit Bank Charges, Credit Cash | Credit fee income, Debit your account |
The two records are mirror images and always will be. Once you see that, the statement stops being confusing and simply becomes someone else's ledger.
The practical rule: take amounts and dates from your bank statement, never the debit and credit wording.
Key terms in plain English
- Debit (Dr)
- An entry on the left side of an account. It is a position, not a judgement. Whether it increases or decreases the account depends entirely on the account type.
- Credit (Cr)
- An entry on the right side of an account. Again a position only. Credit does not mean money received and does not mean something good.
- Normal balance
- The side an account usually sits on, which is the side that increases it. Assets normally hold a debit balance; liabilities normally hold a credit balance.
- Double entry
- Every transaction is recorded twice, once as a debit and once as a credit of equal value, so the books stay in balance.
- Contra account
- An account that sits opposite its normal side, such as accumulated depreciation, which reduces an asset and therefore carries a credit balance.
- Drawings
- Money taken out by the owner. It reduces equity, so despite being a withdrawal it increases with a debit, in the same way an expense does.
Why each account type behaves the way it does
The rules in the table are not arbitrary. They fall directly out of the accounting equation:
Assets = Liabilities + Equity
Assets sit on the left of that equation, so assets increase with a left-side entry, which is a debit. Liabilities and equity sit on the right, so they increase with a credit. Everything else follows from how it affects equity:
- Revenue increases equity, so it moves the same way as equity and increases with a credit.
- Expenses reduce equity, so they move against it and increase with a debit.
- Drawings reduce equity as well, which is why a withdrawal is a debit despite money leaving the business.
If the equation itself is unfamiliar, the accounting equation calculator shows how assets, liabilities, and equity relate before you apply any of this.
Why revenue increases with a credit
This is the rule that feels most backwards. Money arrives, which feels like an increase, so people want to debit the revenue account.
The resolution is that revenue is not the money. Revenue is the reason the money arrived. On a RM 500 cash sale, two different things go up: the cash you now hold, and the profit you have earned.
| Account | Side | What it represents |
|---|---|---|
| Cash | Debit 500 | The asset you now hold |
| Revenue | Credit 500 | The earnings that increase equity |
An asset rose and equity rose, so both sides of the accounting equation moved by RM 500 and it still balances. If you had debited both, the equation would break immediately.
Five worked examples
Read the reasoning column rather than memorising the entries. The reasoning is what transfers to transactions you have not seen before.
| Transaction | Debit | Credit | Why |
|---|---|---|---|
| Sell a service for RM 500 cash | Debit Cash 500 | Credit Revenue 500 | An asset rises and equity rises through profit |
| Pay RM 800 rent by bank transfer | Debit Rent Expense 800 | Credit Cash 800 | An expense rises, reducing equity, and an asset falls |
| Buy stock on credit for RM 1,200 | Debit Inventory 1,200 | Credit Trade Payables 1,200 | An asset rises and a liability rises |
| Owner takes RM 600 for personal use | Debit Drawings 600 | Credit Cash 600 | Equity falls through drawings and an asset falls |
| Customer pays a RM 900 invoice | Debit Cash 900 | Credit Trade Receivables 900 | One asset rises while another falls, so no change in total |
The last example is worth pausing on. Both accounts are assets, so one rises and one falls and total assets do not change. Debits and credits still balance.
Four traps that cause wrong entries
1. Treating debit as bad and credit as good
Neither word carries any judgement about the business.
Example
A RM 800 rent payment is a debit to Rent Expense. A RM 500 sale is a credit to Revenue. One is a cost and one is income, yet the labels say nothing about which is welcome.
Why it happens. Debit and credit only describe which side of the account the entry sits on. Reading them as positive or negative leads to guessing rather than applying the rule for the account type.
What to do. Say the words as left and right in your head until the habit fades.
2. Copying the wording on your bank statement
The statement is written from the bank point of view, not yours.
Example
The bank credits your account when you deposit money, but in your own books receiving cash is a debit.
Why it happens. Your balance is an asset to you and a liability to the bank. Both records are correct and they will always use opposite words for the same event.
What to do. Decide entries from your own account types. Use the statement for amounts and dates only, never for the debit or credit wording.
3. Assuming drawings behave like equity
Equity increases with a credit, but drawings increase with a debit.
Example
The owner withdraws RM 600. Drawings is debited even though it belongs to the equity family.
Why it happens. Drawings reduce equity, so it moves in the opposite direction to the capital account. Expenses work the same way for the same reason.
What to do. Remember that anything reducing equity, whether an expense or a withdrawal, increases with a debit.
4. Debiting revenue because money came in
The cash gets the debit. The revenue account does not.
Example
On a RM 500 cash sale, people often want to debit both Cash and Revenue because both feel like increases.
Why it happens. Revenue is not the money itself, it is the reason the money arrived. Cash is the asset that rose, so cash takes the debit and revenue takes the credit.
What to do. Ask which account holds the money. That one is debited. The account explaining why is credited.
Quick checklist for any entry
- I can state that debit means left and credit means right.
- I identify the account type before deciding the side.
- I check whether the account is increasing or decreasing.
- I apply the normal balance rule for that account type.
- I ignore the wording used on my bank statement.
- I confirm the debit amount equals the credit amount.
- I treat expenses and drawings as reductions of equity.
- I check that the entry still satisfies the accounting equation.
This guide explains general bookkeeping concepts for learning and review. It is not accounting advice for a specific set of accounts.
Not sure which side to use?
Pick the account type and whether it is going up or down, and get the side plus the normal balance.
Sources
This guide is based on the official pages below, last checked on 19 August 2026. Where they disagree with anything written here, they are the authority.
- Conceptual Framework for Financial Reporting
The definitions of asset, liability, equity, income and expense that decide which side of an account an increase is recorded on.
- IAS 1 Presentation of Financial Statements
Where each of the six account types ends up in a published set of accounts. MASB adopts this in Malaysia as MFRS 101.
How this content is put together is set out in our editorial policy.
Debit and Credit FAQs
Is a debit money coming in or money going out?
Neither on its own. A debit is simply an entry on the left side of an account. It increases assets, expenses, and drawings, and it decreases liabilities, equity, and revenue. You have to know the account type before the word tells you anything.
What do Dr and Cr actually stand for?
They come from the Latin debere, meaning to owe, and credere, meaning to entrust. The abbreviations kept the r from the Latin spellings, which is why credit is shortened to Cr rather than Cd.
Is a debit card related to accounting debits?
Only through the bank point of view. A debit card takes money from your account, which reduces what the bank owes you, and reductions in a liability are debits in the bank records. In your own books, spending that money is a credit to cash.
What is a contra account?
A contra account sits on the opposite side to the type it belongs to. Accumulated depreciation is a contra asset, so it carries a credit balance and reduces the asset it relates to. Sales returns work the same way against revenue.
Do debits always have to equal credits?
Yes, for every individual transaction and therefore for the books as a whole. If the totals do not agree, one side was posted without the other, or an amount was written incorrectly, which is what a trial balance is designed to reveal.
Can the Debit/Credit Checker tell me the account type?
No. You choose the account type and whether it is increasing or decreasing, and the checker returns the correct side along with the normal balance. Deciding whether something is an asset, an expense, or a liability is the judgement it cannot make for you.