Does a debit reduce liabilities?
Emma Miller
Updated on February 12, 2026
A debit increases asset or expense accounts, and decreases liability, revenue or equity accounts.
What are the rule of debit entry for liabilities?
The “rule of debits” says that all accounts that normally contain a debit balance will increase in amount when debited and reduce when credited. And the accounts that normally have a debit balance deal with assets and expenses….Rules of Debits by Account.
| Accounts | Debit |
|---|---|
| Assets | + |
| Expenses | + |
| Liability | – |
| Equity | – |
Why does debit increase assets and decrease liabilities?
As a liability is the converse, a debit will decrease our liabilities. You can prove it to yourself by working out an example where you take on a $100 loan (a liability) and thus increase your capital. No asset is involved so assets will be 0. I’ll leave this as an exercise to the reader.
How are debits and credits related in a liability account?
In liability types of accounts credit balances are the traditional ending balance. Debit entries are most commonly payments to the creditors. In liability accounts credits increase the balance and debits decrease the balance.
What are the rules for debit and credit?
There are certain rules for recording increase or decrease in assets, liabilities and capital in the books of accounts, which are known as rules for debit and credit. Separate records of transactions are known as accounts. Accounts are kept to show transactions of similar nature.
What does a debit do to an account?
Debits increase asset or expense accounts and decrease liability, revenue or equity accounts. Credits do the reverse. When recording a transaction, every debit entry must have a corresponding credit entry for the same dollar amount, or vice-versa. Here’s What We’ll Cover:
