In accounting, a debit is primarily used to signify an increase in assets or expenses and a decrease in liabilities, equity, or revenue. However, when specifically addressing the scenarios mentioned in the question, it’s essential to differentiate the applications:
- Decrease in an asset: A debit does not record a decrease in an asset. Instead, a credit would be used for that purpose.
- Decrease in an expense account: A debit is not used to decrease an expense. Again, that requires a credit entry.
- Increase in a revenue account: A debit does not record an increase in revenue. Revenue increases are recorded with credits.
- Increase in the balance of common stock: This would also not be recorded as a debit; rather, it is recorded as a credit.
- Decrease in the balance of revenue: To decrease revenue, you would apply a debit.
Ultimately, a debit generally signifies an increase in assets or expenses and a decrease in liabilities or equity. Understanding these principles is vital for accurate bookkeeping and financial reporting.