Debit and credit - what is this term?

Accounting Today there is every enterprise, whether it is firm, manufacture, store, or educational institution.And literate person must understand basic financial concepts.Many people have heard terms such as "account debit, credit", but what it is, can be explained much more.However, to date knowledge of such basic concepts - just a necessity.Debit and credit - what is it?It is necessary to understand in more detail with data concepts.

General information

debit and credit - what's that?These terms are quite abstract even for accounting, but play an important role at all levels.These concepts can be used interchangeably, both are able to increase or decrease the amount of funds in the account, but these methods are based on a clear set of accounting principles.

Methods of Accounting Accounting

debit and credit - it's from the perspective of accounting and auditing?It's just the methods used in the accounting report.In fact, it opposites to each other.Debit can be translated from Latin as "he shall", and credit - "I should."In these phrases is the whole essence of these concepts.It would not be a mistake to say that these terms - accounting accounts opposite.If you leave money, the loan grows.If you come - that it has been growing for debit.These are defined as areas, possibilities and limits of different economic processes and financial transactions.

Accounting income and expenditure

discusses the concept used in the accounts presented in the form of a table with two columns.The columns are the data that are taken from such accounts as debits and credits.What it is?We can say that accounting - is the basis of the financial language necessary for the analysis of any organization.It uses a system transactions, which was created to account for all transactions.However, there are liabilities and assets.Active account - is the placement of the bank or company.Debit in this case - the arrival of funds, and credit, the flow rate.For passive accounts, which reflect the state of fundraising, debit accounts will act as a flow and credit - the parish.If the accounts of the arrival of the asset is increased, then we can talk about an increase in ownership of the company.If passive debit accounts will grow, it means that the assets of the enterprise are reduced.

Debit: how does it work?

Let us examine this concept.In the terminology of the financial statements of money written off and charged to the accounts is not business.Needless to say, the business "attributed to" the money that he gets when it comes to accounting principles.Debit and credit - what is it, after all?Since reporting is always balanced, certain accounts may be used simultaneously.Simply put, any transaction has a loan and a debit.Accountants usually just write off the funds that come into the company, or company.What does it mean?For example, if the asset increases, this increase is in the debit account.If you buy a computer or furniture, the activity increased again.In other words, they were debited.

Credit: how does it work?

Common lending rules come straight from the business.At a time when the inventory as it "leaves" the company, the funds begin to flow for the purchase of goods.This increases the debit (cash) account, as well as increases and credit - ie receivables.Capital, income and debts are growing with credits.That is the so-called "credit" accounts, which are written off and reduced.

Reducing against increasing

How do the concepts of flow and coming to practice?Since different accounts increase or decrease in the comparison of credit and debit, people tend to confuse these terms.In theory, all bare is fairly simple.Money just changed their accounts as debits and credits, and just show how the redistributed money when they leave the company or come into it.Parish when he paid (and other liabilities does not exist), does not reduce the responsibility of your account, however, increases the assets account upon receipt.For example, if an investor buys a stock, business income increases cash account (debit), but will also increase and severally part of the participation in the same amount, that is, the balance sheet will be restored.To do this just considered final turnovers on debit and credit over a certain period.Often you can also find such a term as "debit-credit transaction", but no specific value of this concept can not be held.It is simply intended to indicate that the wiring is made between credit and debit accounts.

Debit and credit cards

There is a certain confusion in these terms, as they are often used in different circumstances.The creditors - those who collect the money, and if something will be credited to the account, the credit will increase.However, this reflects only one aspect of this concept: credit - is money that came out of the company and are in the form of borrower's obligations.Debit card is also used for the immediate transfer of funds from the cash account, and shows an increase in debit accounts (expenses) in the money bill.