Debits and Credits form the basis of double-entry bookkeeping.
What this means is that for every transaction that occurs, like gravity, whatever goes up must go down. In accounting terms, for whatever the debit amount there must be a corresponding credit amount.
However, this isn’t limited to one account. For example, you can have three debit for $10 and one credit for $30 and this is a valid entry.
A good example of debits and credits is in your bank loan.
When you pay your bank loan, your loan payable account will decrease creating a debit. Your bank account will also decrease creating a credit for the same amount.
However, when you record your interest and bank fees incurred each month you get an entry with two debits and one credit. On the debit side, you have your interest expense of $100 and bank fees of $10 but on the credit side you have an increase in your loan payable for $110.
Remember, its essential that both sides balance to the same amount.
There is no limit on the amount you can have on either side if they are part of the same transaction but for simplicity sake, its better to keep them as small as possible.
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