标题: Help in understanding a basic accounting principle [打印本页] 作者: kseniaru 时间: 2011-7-24 07:18 标题: Help in understanding a basic accounting principle
'An entry which increases an asset account is called a debit.'
So if my bank account is my asset account, when I debit money, money actually goes out so it is a 'decrease'. But the above statement has it the other way round.
Kindly help me understand this.作者: jcole21 时间: 2011-7-24 07:22
I "think" its because the bak statement is from the perspective of the bank. The money held in your account is a liability for the bank.作者: brain_wash_your 时间: 2011-7-24 07:26
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Edited 1 time(s). Last edit at Sunday, July 10, 2011 at 08:29PM by Micholien.作者: Wendy01 时间: 2011-7-24 07:31
Casey is right, when you look at your bank statement, the statement is shown from the perspective of the Bank. The money you deposit is a liability to the bank, therefore when you withdraw money their Liability is reducing hence a debit.
From the companies perspective, cash/bank a/c are an asset, hence the rule applies, i.e., 'An entry which increases an asset account is called a debit.' For example when you by a machinery for cash following transactions occur:
Debit: Machinery A/C ( Asset increasing, hence the Debit)
Credit: Cash/bank A/C (ASSET decreasing, hence the Credit)
Hope this helps!作者: maratikus 时间: 2011-7-24 07:35
To add to Shanan, debit is increase of asset or decrease of liability. Your account with the bank is an asset for you but a liability for bank. So when you withdraw cash , bank bebits the amount indicating a reduction of his liability.
Bank statement is a statemnt of bank's liability. So try to recognize it from banks perspective.作者: PieMan 时间: 2011-7-24 07:39
I was told were not supposed to learn/know debits and credits. Is that not true?作者: RepoToronto 时间: 2011-7-24 07:47
