When an amount is entered on the left side of an account, what is this action referred to?

When an amount is entered on the left side of an account, this action is referred to as a debit. In accounting, the left side of an account typically represents increases in assets or expenses, and decreases in liabilities, equity, or revenue. By convention, debits are used to record transactions that enhance the value of what the organization owns (assets) or to track costs incurred (expenses).

Understanding this concept is essential for grasping the double-entry accounting system, where every entry to an account must be accompanied by an equal and opposite entry to another account. The practice of debiting and crediting helps maintain balance in the accounting equation, which states that Assets = Liabilities + Equity. Thus, knowing that a debit entry increases certain accounts is fundamental to accurate financial reporting and analysis.