Double-entry bookkeeping(redirected from Debit and Credit Conventions)
Also found in: Dictionary, Thesaurus.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A system of accounting where every transaction is recorded as a debit to one account and a credit to another. That is, one who uses a double-entry bookkeeping system records each transaction twice, such that each credit (representing revenue) is recorded as a credit to one's capital account and as a debit on one's bank account. For example, if a company sells a product for $100, it adds $100 to its capital account and subtracts $100 to its bank account. One way of conceptualizing the bank account is from the bank's perspective: the debits are debits because any asset in a bank account represents a liability for the bank; this is why they are subtracted instead of added. However, the data are recorded twice to prevent errors in bookkeeping: the total debits and credits recorded should add to zero.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved