What does 'debit' mean in account transactions?

What does 'debit' mean in account transactions?

• A. Deposit into your account
• B. Withdrawal from your account
• C. Transfer between accounts
• D. Payment received

Answer: (B)

In the context of account transactions, the term 'debit' is used to refer to the act of withdrawing funds from an account. When a debit transaction occurs, money is taken out of the account, which decreases the balance.

A debit can be seen in various forms, such as cash withdrawals at an ATM, payments made using a debit card, or checks that are cashed. This understanding of debits is essential in accounting practices, as it signifies an outflow of resources or capital from an individual’s or entity’s financial records.

The other options pertain to different types of transactions. A deposit is the opposite of a debit, as it adds money to the account; transfers between accounts involve moving funds from one account to another, which can have both debit and credit components; payments received generally refer to credit transactions where money is added to an account. Thus, focusing on the definition of 'debit' helps clarify its specific role in transaction accounting.