What Do Dr and Cr Mean in Accounting?
By Markets & Investing DeskUpdated Nov 10, 2026
Key takeaways
- Debits increase assets and expenses, while credits increase liabilities, equity and revenue.
- Every transaction has at least one debit and one credit of equal total value, so the books stay in balance.
- On a bank statement, Cr means money came in and Dr means money went out, because it reflects the bank's ledger.
- A trial balance with equal totals can still hide errors, such as a posting to the wrong account or a missing entry.
Dr is the abbreviation for debit and Cr is the abbreviation for credit. They are the two sides of every entry in double-entry bookkeeping. A debit is recorded on the left side of an account and a credit on the right. Whether each one increases or decreases a balance depends on the type of account. Debits increase assets and expenses. Credits increase liabilities, equity and revenue. Every transaction has at least one debit and one credit of equal total value, so the books stay in balance.
Why debit and credit don’t simply mean “plus” and “minus”
A common mistake is to read Dr as “minus” and Cr as “plus,” or the reverse. The effect actually depends on which side of the accounting equation an account sits on:
Assets = Liabilities + Equity
Asset accounts sit on the left of the equation, so their balances grow on the left (debit) side. Liability and equity accounts sit on the right, so their balances grow on the right (credit) side. Revenue raises equity, so it behaves like equity and increases with a credit. Expenses reduce equity, so they increase with a debit.
This is why “increase” and “decrease” alone can’t describe a journal entry: a $500 debit raises cash but lowers accounts payable. Dr and Cr say which side of the account the amount is posted to; the account type says what that side does.
Dr and Cr for all accounts
| Account type | Examples | Debit (Dr) | Credit (Cr) | Normal balance |
|---|---|---|---|---|
| Assets | Cash, accounts receivable, inventory, equipment | Increase | Decrease | Debit |
| Expenses | Wages, rent, utilities, cost of goods sold | Increase | Decrease | Debit |
| Liabilities | Accounts payable, loans, accrued wages | Decrease | Increase | Credit |
| Equity | Common stock, owner’s or partner’s capital, retained earnings | Decrease | Increase | Credit |
| Revenue | Sales, service income, interest earned | Decrease | Increase | Credit |
The normal balance is the side on which an account usually carries its balance. A “Dr balance” means total debits posted to the account exceed total credits: normal for cash, unusual for a loan account. A loan account with a credit balance is the expected position for a borrower, showing money still owed. Opening balances in accounting software follow the same rule: assets open as Dr, liabilities and equity as Cr. A partner’s capital account is credited for contributions and allocated profit, and debited for drawings or a share of losses.
Worked example
A company invoices a client $1,000 for services (hypothetical figures).
When the invoice is issued:
- Dr Accounts receivable $1,000 (an asset increases: the client now owes money)
- Cr Service revenue $1,000 (revenue increases)
When the client pays:
- Dr Cash $1,000 (an asset increases)
- Cr Accounts receivable $1,000 (an asset decreases: the client no longer owes it)
Each entry has equal debits and credits. Afterward, cash and revenue are each up $1,000 and receivables are back to zero. Total assets rose by $1,000, matched by a $1,000 rise in equity once revenue closes into retained earnings.
The same pattern explains accounts payable. A supplier’s unpaid bill is recorded as a debit to an expense or asset and a credit to accounts payable, which increases the liability. Paying it debits accounts payable and credits cash. In accounting systems, “Dr GL” and “Cr GL” simply name the general ledger accounts receiving the debit and the credit.
Exceptions that change the answer
Bank and credit card statements read from the bank’s side
On a bank statement, “Cr” next to an amount means money came into your account: a deposit, a transfer in or interest credited. “Dr” means money went out: a withdrawal, a card payment or a fee. So a withdrawal is Dr on your statement.
This looks backward next to your own books, and the reason is perspective. The statement is drawn from the bank’s ledger, where your balance is money the bank owes you, a liability. Deposits increase that liability, so the bank credits it. In your own books the bank balance is an asset, so the same deposit is a debit to cash.
A credit card statement works the same way. The amount you owe is an asset to the card issuer (a receivable). Purchases are debits. Payments, refunds and reversals appear as “Cr” because they reduce what you owe. A “CR” shown next to the balance itself usually means the issuer owes you money, for example after an overpayment or refund.
Dr on a bill, invoice or statement of account
On an invoice or customer statement, “Dr” next to the balance indicates that the customer owes the seller that amount. It is a debit in the seller’s receivables ledger. Once the customer pays in full, the payment is posted as a credit and the balance falls to zero. If the statement still shows a Dr balance after payment, something remains unpaid or the payment has not yet been posted.
Contra accounts carry the opposite balance
Some accounts are deliberately set up to offset another account, so their normal balance runs opposite to their category. Accumulated depreciation and the allowance for doubtful accounts are asset-related but carry credit balances, because they reduce the assets they sit against. Sales returns and allowances sit within revenue but carry debit balances. Owner’s drawings reduce equity and are debited.
A Dr balance in profit and loss
Revenue accounts close with credits and expenses with debits. If expenses exceed revenue, the profit and loss account ends with a net debit balance, which means a net loss for the period.
Where the terms come from
Both words have Latin roots: debit comes from debitum, “what is due,” and credit from creditum, “something entrusted to another.” Why “debit” is shortened with an R it doesn’t obviously contain is debated. Explanations link Dr and Cr to the Latin verbs debere and credere, to “debit record” and “credit record,” or to “debtor” and “creditor,” the terms early ledgers used to describe who owed whom.
How to tell Dr from Cr in a trial balance
A trial balance lists every ledger account with its balance in either the debit or the credit column, following the normal balances above; most contra-asset accounts sit in the credit column. The two totals must match. Equal totals confirm that each entry had matching debits and credits, but not that the right accounts were used: an amount posted to the wrong expense, or a transaction left out entirely, still balances.
The Bottom Line
Anyone recording journal entries, reading a bank or card statement, or checking an invoice needs to know which side an amount sits on and whose books it comes from. Read Dr and Cr as left and right sides of an account, then let the account type decide whether the balance rises or falls. Remember that statements from banks and card issuers show the opposite of your own books.
