04-13-2005, 03:57 PM
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well ur teacher is right, mr. bilal azhar. we used Financial Accounting by Meigs&Meigs, 11/ed. our teacher was mr. mumtaz anwar who is a very well known teacher in ICMAP n ICAP for a long long times.
this book tells tht debit n credit r latin words (if i remember the language correctly). debit means 'left-side' n credit means 'right side' in this language.
many ppl carry a misconception tht debit means tht something is increased, n credit means tht something is decreased due to accounting transations. it is wrong, it is only the matter of convention. in accounting, all the accounts can be categorized into five major types
1- Assets, 2- Liabilities, 3- Capital, 4- Revenues, 5- Expenses.
a 6th type might also be included as CONTRA ACCOUNTS, bcoz many accounts ve contra accounts also. eg Drawing is contra account for Capital, n <b>Sales Return and Allowances</b> is contra A/C for Revenues.
for above mentioned categories, the rules for debit/credit are
(1) <b>Assets </b> and <b>Expenses </b> increase on debit-side, and decrease on credit-side.
(2) <b>Liabilities, Revenues, </b> n <b>Capital</b>(owner's equity) increase on credit-side, n reduced on debit-side.
(3) contra accounts shall increase/decrease o opposite sides of the the actual a/c to whom they are countering.
these rules r thoroughly discussed, n practiced in Meigs&Meigs in first three chapters.
i think it suffices, n beginers of accounting will grasp these concepts easily.
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FARHAN
live, n let live ...
well ur teacher is right, mr. bilal azhar. we used Financial Accounting by Meigs&Meigs, 11/ed. our teacher was mr. mumtaz anwar who is a very well known teacher in ICMAP n ICAP for a long long times.
this book tells tht debit n credit r latin words (if i remember the language correctly). debit means 'left-side' n credit means 'right side' in this language.
many ppl carry a misconception tht debit means tht something is increased, n credit means tht something is decreased due to accounting transations. it is wrong, it is only the matter of convention. in accounting, all the accounts can be categorized into five major types
1- Assets, 2- Liabilities, 3- Capital, 4- Revenues, 5- Expenses.
a 6th type might also be included as CONTRA ACCOUNTS, bcoz many accounts ve contra accounts also. eg Drawing is contra account for Capital, n <b>Sales Return and Allowances</b> is contra A/C for Revenues.
for above mentioned categories, the rules for debit/credit are
(1) <b>Assets </b> and <b>Expenses </b> increase on debit-side, and decrease on credit-side.
(2) <b>Liabilities, Revenues, </b> n <b>Capital</b>(owner's equity) increase on credit-side, n reduced on debit-side.
(3) contra accounts shall increase/decrease o opposite sides of the the actual a/c to whom they are countering.
these rules r thoroughly discussed, n practiced in Meigs&Meigs in first three chapters.
i think it suffices, n beginers of accounting will grasp these concepts easily.
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FARHAN
live, n let live ...
