Debit and credit are the two directions of an accounting entry. By convention, debits increase assets and expenses and decrease liabilities, income and equity; credits do the opposite. For every transaction, total debits equal total credits — the rule that keeps double-entry books balanced.
Understanding debit and credit is the foundation for reading a ledger, a trial balance and the financial statements.
Indian accounting tradition teaches three golden rules that map to account types. Personal accounts — people and entities: debit the receiver, credit the giver. Real accounts — assets: debit what comes in, credit what goes out. Nominal accounts — incomes and expenses: debit expenses and losses, credit incomes and gains. Paying rent of ₹5,000 from the bank debits rent, since an expense arises, and credits bank, since an asset goes out; rules or equation, both routes land on the same entry.
The everyday confusion is the bank statement. Your bank credits your account when money arrives because the statement is written from the bank's books, where your deposit is its liability — you are the giver it owes. In your own books, the same deposit is a debit to bank. Reading a statement therefore means mentally flipping every line, which is exactly what a bank reconciliation does formally.
Trouble usually starts with treating debit as bad and credit as good — the words carry no moral weight, only direction. A debit balance in a supplier's account is not an error by definition; it may be an advance paid or an over-payment to recover. What matters is whether the balance makes sense for that account's nature, which is the question ledger scrutiny asks of every line before accounts are finalised.