Debit or Credit

quxuik

Hello,

Does anybody know the different between debit and credit and can explain it to me? Please! I am just starting to study accounting...

Suzywuzy

A debit on an account is money coming out of it, a credit is money going into it.

quxuik

Suzywuzy wrote: »

A debit on an account is money coming out of it, a credit is money going into it.

Thank You

drdre

quxuik wrote: »

Hello,

Does anybody know the different between debit and credit and can explain it to me? Please! I am just starting to study accounting...

I have studied accounting in college for 2-3 years and only found out the answer last month as my exams are coming up.:)

Leon11

When doing T Accounts I was told a good phrase a while back "credit the giver, debit the reciever" works for me now, I actually get all my dr/cr right!

Climber

Confused.

If a debit on an account is money coming out of it, then why does my salary appear in my current account on the Debit side?

kluivert

Climber wrote: »

Confused.

If a debit on an account is money coming out of it, then why does my salary appear in my current account on the Debit side?

The bank statements are the reverse because its not your account its the bank accounts with your name on it. therefore you are there Creditor ie they owe you that money back and therefore thats why your wages appear as a Credit. This is the only circumstance in which this will appear.

Quick tip for remembering which side is the correct side:

DR-ive on the left Cr-ash on the right.

Debit is for monies or Transaction entering the T Account. Credit is for monies leaving the T account. There is no to this but needs to be explained by a graph. Because you have both Revenue and Expense transactions.
So there are only four categories to master.

Sorry I cant remember them all at the moment, Revenue Expenses Capital and....

Just think the transaction through.

Inputting a sales Invoice. Debt Debtors (Balance Sheet) Credit Sales (Profit & Loss)
Inputting receipt for sales Invoice, Debt Bank (Balance Sheet) Credit Debtors (Balance Sheet)

You have now reflected the sales invoice in the P & L Account. Any you are showing that the invoice is paid, as you have a zero Debtor Balance in your Debtors Account, You have shown that the money was lodged in the Bank by Debting the Bank Account.

Opposite for Expenses.

Remember golden rule: for each debit there must be a credit and vice versa. You may have mutiple entries on either side but both sides must balance to be equal to each other.

Example of this is wages.

Db: Wages 100
Cr: Paye 20
Cr: Prsi 20
Cr: Bank 60

Leon11

another one is:

debit assets and expenses

credit liabilities and income

Chevy RV

Try Dr (Debit) Assets - Losses - Expenses


And Cr (Credit) Liabilities - Gains - Income (Sales)


Note :- They are direct opposites under each other. It should work every time.!!!

Regards,


Chevy RV

Suzywuzy

All Elephants - Assets and Expenses - Debits

Like Peanuts - Liabilities and Profits - Credits

The Chessplayer

drdre wrote: »

I have studied accounting in college for 2-3 years and only found out the answer last month as my exams are coming up.:)

Legend!

The Chessplayer

Suzywuzy wrote: »

All Elephants - Assets and Expenses - Debits

Like Peanuts - Liabilities and Profits - Credits

But do elephants really like peanuts? Imagine for a second, if you will, a qualified accountant getting a job in Dublin Zoo, and deciding to cut costs in the Elephant House by feeding them peanuts, which led to the death of an elephant. Given this, I fear that the "all elephants like peanuts" mantra would not be ethical.

Wolff

A debit on an account is money coming out of it, a credit is money going into it.

Suzywuzy - I hope you dont work in accountancy !

chump

Wolff wrote: »

A debit on an account is money coming out of it, a credit is money going into it.

Suzywuzy - I hope you dont work in accountancy !

so a debit to Bank is money coming out of it?

Mikosyko

Accountancy is hard! But worth the effort i feel!

The CCAinsider

Credits are closer to the window.

On a bank statement you get the banks view of the world where a Dr means you are overdrawn and a cr means you have money in the bank.

When accounting for anything else the elephand and peanut example says it all, althoug I learned it as Dr = Assets and losses, CR = liabilities and gains and purchases are always on the left.