Hi everybody
Does someone has the answer for the question below
IF ASSETS ARE GOOD AND LIABILITIES ARE BAD, WHY ARE THEY ON THE DEBIT SIDE OF THE BALANCE SHEET?
THANKS
CRAFT[D]
what did u actually want to ask craft? if it was nt a terrible effort to cut a joke
he might be considering Bal. Sheet as a T-Account...if this is the case then understand the fact that Bal. Sheet is not a T-Account...
challo lets assume dat balance sheet is a t account. even then assets ke debit side per annay main kia problem hay
wellll...the problem is that, as i understand, while defining debit we say," the left hand side of an account", and in this way the GOOD (Assets) should not be on dr side.
The only reason may be that the person who made thoese rules for Dr or CR was not muslim...........Kaun Mr. CRAFT? I must be right,if you were nt Kidding!
-Debit means commes in.
(simply what you have your own, either receivable or in your custudy)
All the Debit side are CURRENT ASSETS (includes all receivables, stocks, Cash/Bank Balances, advances, prepaid exp) and Fixed Assets.
-Credit means goes out.
(simply what you have to pay and your capital which is payable to you)
All the Capitals, Loans & All other payables, provisions o/s, etc.
PLEASE REMEMBER ALWAYS-
Debit balances are receivable. Credit balances are payable.
Debit balances shows losses and credit balances shows gain.
Debit comes-in & Credit goes-out.
In Accounting System every transaction effected to two catagory or Account. One A/C will be Debited, where item/figures are coming-in & second A/C will be Credited, where item/figures are going-out.
[quote]<i>Originally posted by sam</i>
<br />LO AIK AUR AA GAYE MARKET MEIN
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Debit means commes in.
Credit means goes out.
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If Debit means comes in then why do bank credit the account when the money comes in the account ...
Because in the Bank's books deposited amount is debited to their Deposit A/C and Credit to Client Current/saving A/C which is payable, Bank Statment is Client A/C Statement related to Bank.
In your books,If you are a Client, your deposit will be debited to your Bank A/C and to be Credited to your client A/C, in your books, who is paying to you against recievable.
I think it is clear now, if I made mistake, really I am sorry for that.........
[quote]<i>Originally posted by sam</i>
<br />for e.g. in case of a liability a company takes a loan from a bank and the money comes in the bank account of the company but this is also creditted and known as liability.
<font color="blue"></font id="blue"> REPLYWhen a company takes a loan, then in the books of Company's Bank A/c will be Debited and Loan A/C will be Credited, as a Liabilities,
in case of Drawing of cash from the company the cash goes out to the owner but it is debitted and is known as drawing.
<font color="blue"></font id="blue"> REPLY in this case Cash/Bank will be Credided and owner A/c will be debited.
in case of introducing money in the business by the owner the money comes in the business bank account but is known as capital which is also COMES IN as described by my brother but it is also creditted.
<font color="blue"></font id="blue"> REPLY in this case money comes in, Bank/Cash will be debited and Owner Capital A/C will be Credited, which is payable to Owner.
If owner is drawing the money, the enteries in the books will be just opposit, as Cash/Bank will be credited & Owner Capital A/C will be debited.
there many examples like these which are enough to perish the old accounting concepts like these.
<font color="blue"></font id="blue"> Please note that Balance Sheet & P&L figures will not be tallied with BS, untill all the transactions are correctly been not posted in to the General Ledger, now a days we have latest Oracle Financial System are implemented, all the transaction are automaticly posted by the System, but accounting concept by Generating the Accounting system is the same, never change.
Mr. Abdul Rehman, wat u say may make slightest of sense for you, But its quite humurous if someone says DR means come in and CR go out
My dear, I am sorry, that I am unable to convinced you, on this topic,
I think that this is not your field,
you can say that any figures in GL accounts, if "comming to" will be debit, and that entery "coming from" any account will be credited.
Same like suppose that you are the figure & coming from out side, and you are entering in your house, so that you will be credited outside, and you will be debited to your house, from both side you have to cover, and you are effecting both side to keep you in balance in accounting concept.
this is the simple (desi) example, rules in accounts also.
Thanks,
Mr. Abdul Rehman thanks for letting me know that this is not my field.
Debit; Comes in
Credit; Goes out
Sir this the most desiest way and some of the most desi teachers still use it. I wont like to argue but mind it, this is pretty funny