Debit and Credit Balances

The first rule of double-entry bookkeeping is that for every debit there must be a credit.

This means that an accounting entry always involves one account being debited and another account being credited.

Let us consider what happens when a $20,000 car is purchased.

• The Motor Vehicle account (which is an asset) is debited with $20,000.
• The Bank Account is credited with $20,000.