What Account Is Credited When Purchasing Supplies With a Debit Card?

Accounting entries are structured records of a business’s financial transactions. These records show how money flows and how assets, liabilities, and equity change. Accurate entries are fundamental for financial reporting, allowing businesses to generate statements reflecting their economic performance and position. They are essential for internal decision-making, tax compliance, and demonstrating financial health.

Fundamentals of Debits and Credits

Understanding debits and credits is central to the double-entry accounting system, where every financial transaction affects at least two accounts. A debit is an entry on the left side of an account, while a credit is an entry on the right side. Their effect depends on the account type.

For asset and expense accounts, a debit increases the balance, and a credit decreases it. Conversely, for liability, equity, and revenue accounts, a credit increases the balance, and a debit decreases it. This system ensures the accounting equation—Assets equal Liabilities plus Equity—always remains in balance. Total debits for any transaction must always equal total credits.

Recording a Purchase of Supplies

Supplies are items a business uses in its daily operations, such as office supplies or small tools. These items are assets because they provide a future economic benefit. When purchased, a business acquires a resource consumed over time to support activities.

Recording the purchase involves increasing the Supplies asset account. An increase in an asset account is always recorded as a debit. Therefore, the Supplies account is debited to reflect the acquired items. This entry establishes the business holds these materials, which will eventually be used and expensed.

The Role of the Credited Account

When a business uses a debit card to purchase supplies, the transaction directly impacts its cash balance. A business debit card is linked to the company’s checking account, meaning funds are immediately withdrawn. This direct deduction distinguishes debit card transactions from credit card purchases, which involve a line of credit and create a liability.

In accounting, the business’s checking account is the Cash or Bank account, an asset account. Since the debit card transaction decreases the cash balance, the Cash or Bank account must be credited. A decrease in an asset account is always recorded as a credit. Therefore, when supplies are purchased with a debit card, the Supplies asset account is debited to reflect the increase in supplies, and the Cash or Bank asset account is credited to show the decrease in cash.