Plain definition
Debit and credit are labels for the left and right sides of an account. Their effect depends on the account’s normal balance: for example, a debit commonly increases an asset or expense, while a credit commonly increases a liability, equity, or revenue. The total debits and credits in each entry must match.
A debit is a left-side entry and a credit is a right-side entry; the effect follows the account type. After a delivered service is billed, receivables are debited because the asset increases and revenue is credited because equity increases through profit.
Illustrative example
Monetary examples use Saudi riyals (SAR). The same principles apply in other currencies.
For example, after services worth have been provided and billed on credit, the entry debits receivables and credits revenue by .
The entry tells the reviewer that the company has earned an amount but has not yet collected it; a later cash receipt debits cash and credits receivables, with no second revenue entry.
Why it matters
Confusing the labels with cash received or paid produces entries that may balance but report the wrong accounts.
Practical consequence
Use account-type rules in the chart of accounts and require a description that explains the business event behind each manual entry.
The mistake is memorising “debit means plus.” That rule fails for liabilities and revenue. Use an account-type guide and make the entry description state the delivered service, received goods, or obligation that caused it.