In accounting, journal entries are used to record financial transactions. Credits increase liability or equity accounts while decreasing asset accounts. On the contrary, a debit entry boosts asset accounts and reduces liabilities or equity accounts.nnThe fundamental accounting principle is the accounting equation, which states that assets equal liabilities plus equity. When accountants credit revenue, they increase either the equity or liability side of the equation. Likewise, when expenses are debited, assets decrease while either liabilities or equity rise.