04-05-2005, 10:16 PM
AOA
Bilal
The left side of the T-account is called Debit,
and the right side is called Credit.
One of the most difficult concepts for the new student of accounting is "Debits and Credits." Many of them try to associate them with plus (+) and minus (-). Well, as you know, this causes confusion, especially when you introduce something such as a contra asset account! I tackle this problem with what I call "BIG T - little t." I write a large "T" account on the board and label it Assets, Liabilities, and of course, Equity. I also label the two sides as "Debit Balance" and "Credit Balance" respectively. I then proceed to ask the students to name different asset, liability, and equity accounts and whether the account normally has a debit or credit balance. Once they properly identify the account (i.e., liability account/credit balance), I then ask where and how I should write the account within the "BIG T". Ultimately, I am instructed by the student to write a "small t" on the right or left side of the "BIG T," under asset, liability, or equity, as the case may be. I continue to explain and show them the relationships that debits and credits have with each account. They then begin to realize that debits increase debit balance accounts and that credits increase credit balance accounts and that the opposite (i.e., decrease) is true when you enter a credit on a debit balance account or debit on a credit balance account and so on. They also begin to understand that equal debits and credits can all be on one side of the "BIG T" (i.e., all assets or all equity, etc.) or can, of course, involve either or both sides and also include both balance sheet and income statement accounts.The key element is, I believe, the visualization of multiple "t" accounts contained within and interacting with the entire accounting system; the "BIG T."
put in the left column, say Debit
put in the right column, say Credit.
the left side of the t as "debit" and
the right side of the t as "credit"
There was an accountant that worked in the same office for 50 years. Every day, the man came to work and did the same thing. He would sit down at his desk, unlock it, open the top left drawer and look inside and close it. Then he would open the top right drawer and look inside and close it. Once that routine was complete, he would again lock his desk and work all day. When he finally retired, his office mates rushed to his desk to see what was in those two top drawers. In the left one was a sign that said "DEBIT" and in the right one was a sign that said "CREDIT."
avoid the potentially confusing debit and credit nomenclature. Instead, make sure that the equation,
Assets = Liabilities + Equity + Income - Expenses, is respected
Don't let the words Debits and Credits scare you. They simply refer to the Left side and Right side of a 'T Account'
In accounting, debit (DR) means left and credit (CR) means right. The left side of an account is called the debit side; the right side of an account is called the credit side
Debit A debit is the left hand side of an account
Credit A credit is the right hand side of an account
(above are quotation with Compliments & Thanks of diferrent Sites)
Regards
Mahtab
Bilal
The left side of the T-account is called Debit,
and the right side is called Credit.
One of the most difficult concepts for the new student of accounting is "Debits and Credits." Many of them try to associate them with plus (+) and minus (-). Well, as you know, this causes confusion, especially when you introduce something such as a contra asset account! I tackle this problem with what I call "BIG T - little t." I write a large "T" account on the board and label it Assets, Liabilities, and of course, Equity. I also label the two sides as "Debit Balance" and "Credit Balance" respectively. I then proceed to ask the students to name different asset, liability, and equity accounts and whether the account normally has a debit or credit balance. Once they properly identify the account (i.e., liability account/credit balance), I then ask where and how I should write the account within the "BIG T". Ultimately, I am instructed by the student to write a "small t" on the right or left side of the "BIG T," under asset, liability, or equity, as the case may be. I continue to explain and show them the relationships that debits and credits have with each account. They then begin to realize that debits increase debit balance accounts and that credits increase credit balance accounts and that the opposite (i.e., decrease) is true when you enter a credit on a debit balance account or debit on a credit balance account and so on. They also begin to understand that equal debits and credits can all be on one side of the "BIG T" (i.e., all assets or all equity, etc.) or can, of course, involve either or both sides and also include both balance sheet and income statement accounts.The key element is, I believe, the visualization of multiple "t" accounts contained within and interacting with the entire accounting system; the "BIG T."
put in the left column, say Debit
put in the right column, say Credit.
the left side of the t as "debit" and
the right side of the t as "credit"
There was an accountant that worked in the same office for 50 years. Every day, the man came to work and did the same thing. He would sit down at his desk, unlock it, open the top left drawer and look inside and close it. Then he would open the top right drawer and look inside and close it. Once that routine was complete, he would again lock his desk and work all day. When he finally retired, his office mates rushed to his desk to see what was in those two top drawers. In the left one was a sign that said "DEBIT" and in the right one was a sign that said "CREDIT."
avoid the potentially confusing debit and credit nomenclature. Instead, make sure that the equation,
Assets = Liabilities + Equity + Income - Expenses, is respected
Don't let the words Debits and Credits scare you. They simply refer to the Left side and Right side of a 'T Account'
In accounting, debit (DR) means left and credit (CR) means right. The left side of an account is called the debit side; the right side of an account is called the credit side
Debit A debit is the left hand side of an account
Credit A credit is the right hand side of an account
(above are quotation with Compliments & Thanks of diferrent Sites)
Regards
Mahtab