Meaning
This query is : Resolved
28 July 2011
what is debit?and what is credit?
28 July 2011
Debit and Credit are formal bookkeeping and accounting terms that have opposite meanings and come from Latin. Debit comes from debere, which means "to owe". The Latin debitum means "debt". Credit comes from the Latin word credere, which means "to believe".
Debit is abbreviated Dr., while credit is abbreviated Cr.
"Debit" also refers to the left side of a general ledger account, while "Credit" refers to the right side.
A debit is also (informally) referred to as a "charge."
A debit or credit changes the balance of an account. Asset and expense accounts increase in value when debited and decrease when credited, whereas liability, equity, and revenue accounts decrease in value when debited and increase when credited. This distinction is somewhat counterintuitive, until the nature of those accounts is more closely scrutinized. For example, revenue is coded as a credit. After recording a day's sales, the company will have credited a certain amount in revenue, and since credits are negative numbers, the balance grows more and more negative. An adjustment to revenue would need to be a debit, because its purpose is to bring the revenue totals closer to zero.
It is often assumed that a debit decreases a balance, and a credit increases it, because this is how the terms are used on bank statements and using a debit card decreases the balance in one's bank account. However, this is because bank statements are traditionally written from the bank's perspective, where the customer's account is a liability. By withdrawing money, the customer is decreasing the bank's liability. Since liability accounts normally have a credit balance, the withdrawal of cash from a banking account is reflected on the bank's balance sheet as a debit.
Source: https://in.answers.yahoo.com/question/index?qid=20061107052207AA05Oxf
Debit is abbreviated Dr., while credit is abbreviated Cr.
"Debit" also refers to the left side of a general ledger account, while "Credit" refers to the right side.
A debit is also (informally) referred to as a "charge."
A debit or credit changes the balance of an account. Asset and expense accounts increase in value when debited and decrease when credited, whereas liability, equity, and revenue accounts decrease in value when debited and increase when credited. This distinction is somewhat counterintuitive, until the nature of those accounts is more closely scrutinized. For example, revenue is coded as a credit. After recording a day's sales, the company will have credited a certain amount in revenue, and since credits are negative numbers, the balance grows more and more negative. An adjustment to revenue would need to be a debit, because its purpose is to bring the revenue totals closer to zero.
It is often assumed that a debit decreases a balance, and a credit increases it, because this is how the terms are used on bank statements and using a debit card decreases the balance in one's bank account. However, this is because bank statements are traditionally written from the bank's perspective, where the customer's account is a liability. By withdrawing money, the customer is decreasing the bank's liability. Since liability accounts normally have a credit balance, the withdrawal of cash from a banking account is reflected on the bank's balance sheet as a debit.
Source: https://in.answers.yahoo.com/question/index?qid=20061107052207AA05Oxf
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- About TDS & Income Tax
- Pass word to open justification report for Q1 for FY 2026-27
- Scrutiny and reopening of past returns
- PPF interest-As Exempt Income disclosure
- Section 194JA & JB Income which ITR Form to use
- Tax on Deemed Capital Gain
- Type of Capital Gain
- Booth for sales promotion
- F & O PROFIT REPORTING FOR AY 2026-27
- Regarding ITR filing with more value than showing in AIS/TIS
- ITR-3 File/Error Found
- Exiting partner in partnership firm in gst portal
- Taxability of credit in canara bank ET & T section (NRO)
- Consequences of Non-Deduction of TDS under Income Tax???????????????
- TDS on Rent received on redevelopment of building
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- Upload Level ValidationITR3Category of Defect B/D
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
