Debits and Credits
Let’s start with the basics. After that, we’ll keep it simple, very simple.
A Debit is a positive (+) accounting transaction. A Credit is a negative (-) accounting transaction. Both Debit and Credit transactions may be made to all Accounts. For instance, Cash is an Account, an Asset Account. When a deposit is made, we "Debit" the Cash account because we add money to it. When a check is written, we "Credit" the Cash account because we deduct money from it.
Any time we have an accounting transaction, there is a Debit to an Account and an equal (and offsetting) Credit to another Account. This is known as "double-entry bookkeeping." For every Debit, there must be an offsetting Credit somewhere for everything to remain in balance. Of course, the Debit can be made to more than one Account. The same goes for the Credit side of the transaction. This implies that there are Accounts that we would expect to have Debit balances and other Accounts with Credit Balances. If they were all added up, they must net to zero. That is the essence of double-entry bookkeeping.
Cash, Accounts Receivable, Inventory, Fixtures and Equipment, Operating Losses and Expenses are Accounts that we expect to have Debit (positive) balances. Accounts Payable, Loans, Equity, Operating Profit and Income are Accounts that commonly have Credit (negative) balances.