Debit / Credit

Moon · 09-22-2005, 03:35 PM

PPL a good definition can be this one!

Whatever you own is debit, and
whatever you owe is credit.

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If you are a politician then you are a lier, but if you are a lier you may not be a politician!

Mahtab · 09-30-2005, 09:13 PM

Thank You Moon

ibrishah · 09-30-2005, 09:56 PM

Both The definitions by Farhan and Moon are the best. I agree with Bilal Azhar that there is no universal definition of Debit/credit we have to just rely on how these terminologies are used while posting our entries.

Prays makes the Future
Ibri
http//www.ibrishah.4t.com

Moon · 10-04-2005, 05:57 PM

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by Mahtab
 Thank You Moon

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You are welcome for more (agar yeh dil mangay) [D] i have a good archive of that.

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If you are a politician then you are a lier, but if you are a lier you may not be a politician!

Griff · 10-20-2005, 11:50 AM

Debits and credits are easy to define and once defined make learning accounting ever so much easier for novices.
In each transaction there is an exchange of values. A Debit is the value received while a Credit is the value given.
Consider the transaction of eating in restaurant, it receives your money thus Debit the Asset Account "Cash"; it gives a dining experience thus Credit the Revenue Account "Food and Beverage Sales".
Debits are the values received. Credits are the values given.
These definitions helped me. Hope they help you too!

accountant1 · 10-28-2005, 02:51 AM

When you deposit money in the bank, the cashier will tell you "I'll credit your account." From that experience, most people assume that cash is a credit, and so credits are good. That is further reinforced when reductions in the accounts are referred to as debits. Besides, if you remove the "i" from debit, you get "debt." So, debits are bad.

Unfortunately, the conditioning we receive at the bank is causing real confusion in the accounting class. Why? Because in accounting we understand that the bank account is a debit account, and that debts are credit accounts - the opposite of what most people expect.

In fact, debits and credits are neither good nor bad. Each transaction, whether it be a good transaction (deposits), or a bad transaction (bills) has both a debit and an equal credit. That's why they call it "double-entry accounting." When the cashier is telling you he or she will "credit your account", they are also entering a debit for the same amount that they are not telling you about. The same is true for the debits to your account - there is also a credit being made at the same time.

I find the best way to understand debits and credits is to identify two components of each transaction 1) what did you get; and, 2) where did it come from. The debit is what you got, and the credit is the source of the item you received. For instance, let's imagine that you purchase a computer with your credit card. Since the computer is what you received it's going to result in a debit to the asset account for your computer. The credit will be applied to the credit card liability account for the same amount.

The banks tend to confuse us because they are telling us the entry to their liability account. When you deposit money in the bank, their liability to you increases. Since liabilities are credit accounts they are crediting our account. When they reduce their liability to us, they are debiting their liability account.

So, if you can identify what you received and where it came from in every transaction you have debits and credits mastered.

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MaFiA · 11-17-2005, 05:44 PM

Credit & Debit are terms used in Double Entry

RaoZub · 05-25-2011, 04:17 PM

<blockquote id="quote">quote<hr height="1" noshade id="quote">Originally posted by bilal azhar
 how would u define debit and credit?

i have been studying accounting for the last two to three years and has studied almost all famous books of accounting like shukla and gupta,frankwood,pbp,pac papers etc but has not find a definition of debit and credit.debit credit rules are given in every book but how would u describe to a layman that what is debit and credit.

one of my accounting teacher,not a chartered accountant gave the following definiton of debit and credit
"when we divide a page into two parts,the left side is called debit and the right side is called credit."

i think that above definiton is not correct.would some body explain to us the debit/credit definition.

bilal
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RaoZub · 05-25-2011, 04:41 PM

Debit and Credit can be define as the alphabets of Accounting.
as we cann't define the letter A in english, So we cann't define Dr and Cr except as the alphabets of accounting.

RaoZub · 05-25-2011, 04:45 PM

Debit and Credit can be define as the alphabets of Accounting.
as we cann't define the letter A in english, So we cann't define Dr and Cr except as the alphabets of accounting.

danishayub_76 · 05-28-2011, 01:45 PM

A bookkeeping and accounting term, indicating an entry made in the left-hand column of the ledger. Debit is the opposite of credit. In common use the phrase 'debit my account' is an instruction to charge a sum of money against the account.