What does debit mean in accounting? Debit and credit - detailed overview

Debit and credit

Debit and credit- standardized methodological methods of accounting. They reveal the possibilities of economic processes and their direction, and they also set boundaries for these possibilities.

Debit- the left side of the account. For active and active-passive accounts, an increase in debit means an increase in the property or property rights of the organization. For passive accounts, an increase in debit means a decrease in the organization's own funds (sources). Comes from lat. debet which means "he must". In Latin, the word for this term is debitum - "debt".

Credit- the right side of the account. For active and active-passive accounts, an increase in credit means a decrease in the value of the property or property rights of the organization. For passive accounts, an increase in credit means an increase in the organization's own funds (sources).

There are two types of accounts: active and passive. Passive - is borrowed funds; active - placed funds of a company, enterprise or bank. For active accounts, debit - income, credit - expenditure. For passive, credit - income, debit - expense.

Basic information

The left side of the account, denoting (somewhat simplifying) property or property rights enterprises in the context of the facts taken into account in the account.

Distinguish concepts debit balance invoices for a certain date and debit turnover accounts for a certain period of time.

Debit balance- monetary assessment of the value of property or property rights of the enterprise, recorded on the account, at a certain point in time.

Debit turnover- the total monetary value of all business transactions over a period of time that led to an increase in property / property rights or a decrease in the source of formation of property, which are taken into account on the account in question.

On active accounts, there is a movement of funds from credit to debit.

On passive accounts, funds move from debit to credit.

Strictly speaking, when recording business transactions, debit turnover in active accounts means an increase in the amounts recorded (active accounts usually take into account the property or property rights of the enterprise or costs). Debit turnover in passive accounts - means a decrease in the amounts taken into account (in passive accounts, revenue and various types of debts of the enterprise are usually taken into account).

Frequently used term posting debit has no independent meaning, the debit of the posting is the debit of the account that affects the posting.

The table below shows on which side this or that article increases or decreases (at the moment):

Notes

Links

• // Encyclopedic Dictionary of Brockhaus and Efron: In 86 volumes (82 volumes and 4 additional). - St. Petersburg. , 1890-1907.

Wikimedia Foundation. 2010 .

See what "Debit and Credit" is in other dictionaries:

magazine "Debit and Credit"- magazine "Debit and credit" (1914) Monthly reference magazine of finance, trade and industry, published in St. Petersburg. Its publisher was V.I. Riedel. The ideas of the magazine "Debet" were taken as the basis: exposing ... ... Technical Translator's Handbook

JOURNAL "DEBIT AND CREDIT"- (1914) monthly reference journal of finance, trade and industry, published in St. Petersburg. Its publisher was V.I.Ridel. The ideas of the Debet magazine were taken as a basis: exposing criminals and debtors. Only six came out in a year ... ... Big accounting dictionary

Accounting Key concepts Accountant Accounting Back balance sheet General ledger Credit Debit Cost price Double cost ... Wikipedia

- (lat. he believes) 1) in accounting means: “I must”, or “I have to give out” 2) the right expense page in accounting books. Vocabulary foreign words included in the Russian language. Chudinov A.N., 1910. CREDIT 1) the ability to borrow money, ... ... Dictionary of foreign words of the Russian language

Explanatory Dictionary of Ushakov

1. CREDIT [re], loan, husband. (lat. credit he believes) (buch.). An account of a person or institution lending something; ant. debit. Debit and credit. 2. CREDIT, credit, husband. (lat. creditum debt). 1. only units Commercial Trust; providing goods... Explanatory Dictionary of Ushakov

credit- and credit. In the meaning "account of debts and expenses" credit. Debit and credit. In the meaning “provision of valuables (money, goods) on credit; the trust; amount of money released for something” credit. Release goods on credit. Use credit. Loans for… … Dictionary of pronunciation and stress difficulties in modern Russian

Credit- (Credit) A loan is a transaction for the transfer of material assets to a loan. The concept of a loan, types of loans, registration, conditions and issuance of a loan Contents >>>>>>>>>>>> ... Encyclopedia of the investor

Accounting Key concepts Accountant Accounting Trial balance General ledger Debit Cost price Double entry Standard methods Cash and cumulative methods RAS / IFRS Financial statements Boo ... Wikipedia

5.

6.

7.

8.

9.

10.

We answer in detail on the Business Earnings portal the questions of our readers - we recently talked about such a concept as, in this article we will tell you in simple terms what debit and credit are.

What is accounting for?

What did they come up with? In order to take into account the property of the enterprise, its obligations, capital and in general all its activities. How to understand how much profit or loss the company receives, how much goods are left in the warehouse and how much money is on the current account?

Therefore, all transactions, whether it is the receipt of amounts to the accounts of the enterprise, the write-off of material assets or settlements with suppliers, are recorded in accounting in monetary terms.

Its essence is that if some property “came”, then the same amount should “leave”. Or vice versa - when writing off a certain amount, you must definitely receive something in return and write it down in the parish.

What is debit and credit?

Debit and credit are the basis accounting, these two terms originated more than 500 years ago and were first mentioned in the book Treatise on accounts and records by the Italian entrepreneur Luca Pacioli. By the way, translated from Latin "debit" - I owe, "credit" - I owe.

In his work on "accounts and records", he gave the following definitions:

1. Credit- my debt to third parties.
2. Debit- debt of third parties to me.

Each business entity receiving revenue from economic activity must keep accounting records. The main task of an accountant is to determine the size of the company's net profit received for a certain time period. In order to find this value, it is necessary to add up all the expenses of the enterprise, and then subtract the result from the total income of the organization.

When generating financial documents, two types of accounts are used: active and passive accounts.In active accounts, the debit reflects the amount of income, and the credit reflects the total amount of current production costs.

On passive accounts, these indicators have the opposite meaning. Putting aside complex accounting concepts, a debit can be described as the amount of a company's profit received by providing services and selling marketable products. The loan reflects the value of the item of expenditure for the purchase of consumables, raw materials, payments to personnel and other production costs.

Binary notation is needed in order to understand the origin of assets and the appropriateness of their use. What a company has, including someone else's debt to it, is reflected in debit accounts. Debit- This is the left column in the statements. Fixed assets are accumulated here, all property is taken into account, as well as profit.

To understand how the receipt of the property that the enterprise has, the concept of a credit account is used. Credit is the right column of the sheet. It shows how much the company owes, how the funds are distributed, which brings the main profit. in plain language- this is the expense of assets that are located in the debit.

What is a debit and credit balance?
The main task of accounting is to display the balance between income and expenses in order to reveal the net income from the activities of the enterprise. In simple terms, this is the difference between the amounts of the entries, that is, the debit minus the credit.

In accounting, if income is greater than expenses, then it is displayed on an active account, as debit balance. And if, on the contrary, expenses exceeded profit, then on a passive account as a credit balance.

Credit and debit turnover

At the end of the month, it is necessary to calculate the debit and credit turnovers, that is, the amounts that have accumulated on the debit and credit of each account during this time. Due to the fact that when calculating the financial result, a binary record of the operation is used, it is easy to say in what favor it went. For example, if we withdraw money from the cash register and send it to a current account, then in the language of accounting we write off these funds from the loan and write them down to debit.

There can be a large number of such entries per month, therefore, certain statistics are compiled based on the results of the reporting period. From the amount that came to the debit, the one that left is deducted. This is called debit turnover. The same is true for credit. Thus, we can trace the movement of values ​​up to the operation and make the right management decision.

What is a debit balance

Now it remains to withdraw the balance that turned out for all accounts. This value will be called the "Final Balance". To calculate the balance, it is necessary to minus the smaller one from the larger turnover. After we have calculated all the revolutions, it is necessary to identify the difference between a larger and smaller number. If the debit figure turned out to be greater, then the balance, that is, the balance between income and expense for the period, is debit. This gives us an idea of ​​what benefit has passed reporting period and allows you to adjust income and expenses to derive the final balance sheet.

Debit balance - a parameter showing that the amount of income exceeds the current expenses of the company. In a situation where production costs are greater than the company's revenue, the term "credit balance" is used. The terms under consideration are used to analyze the success of the financial operations of a particular company for a specific time period. If the amount of debit is significantly higher than the amount of credit on active accounts, we can conclude that the company has high financial stability.

Binary notation

All financial and business transactions are recorded using binary notation. This was done in order to understand what assets the business has and how they were obtained. Thus, it is possible to evaluate the effectiveness of doing business and make the right strategic decisions.

A record of any action carried out in a business is recorded in the transaction log using its essence and two numbers, to which it corresponds in the so-called chart of accounts - grouping depending on the purpose of the operation. For example, if we issued wages from a current account, then at the same time this fact is reflected in two columns at once, where the debit account is the left side of the statement, where the settlements with personnel are reflected, and the credit account is the right side, from where these funds were deducted.

With the assignment of the necessary digital designations, respectively. As a result, this gives an understanding of where the funds came from and where they went, and in a broader sense, what is a credit and debit in accounting.

Differences between debit and credit

Debit and credit reflect the amount of financial resources and assets of the company in monetary terms.These terms are a kind of basis for creating financial statements.The term "credit" is used to display the process of reducing assets that are recorded on the balance sheet of the enterprise. Such assets include: financial resources, real estate, transport, marketable products and other values ​​of the organization.

The term "debit" is used when increasing assets. In this case, in addition to the above material values, the income and profit of the company are taken into account. It is this factor that is the key difference between the terms under consideration.

Similarities

The only similarity between debit and credit is the structure of these indicators. The loan is based on such components as:

• non-current assets;
• production resources;
• production costs;
• finished commercial products;
• financial resources;
• capital and settlements;
• results of financial activity.

Account types

The meaning of the term "loan" depends on the type of company account. In accounting, two systems of accounts are used: active and passive accounts. In the case of an active account, the credit is used to reflect the income or decrease in the price of property funds entered on the firm's balance sheet. Since this part of the table records all the costs of the company that are related to property values, the value of assets is gradually reduced.

In case of passive account, the loan reflects the increase in the value of fixed assets of the enterprise. This fact is explained by the fact that the table shows the amount of money received as a loan from third parties.

Debit and credit: what is it?

Every accountant knows what is a debit and what is a credit. Moreover, in this case, in both words, the stress falls on the first syllables: do not confuse an accounting loan with a loan that is more familiar to many.

But after all, accountants know this, but ordinary people?

Nevertheless, such knowledge is useful to us. How? There are at least a few main reasons:

1. You will understand what accountants are talking about in your presence.
2. Often our politicians use the phrases "accounts payable" or " accounts receivable". By the way, they themselves do not always know what it is - it is worth knowing what they are talking about.
3. Knowledge in accounting may well be useful in everyday life.
4. Would you like to become an accountant?

So, there are at least four reasons to know what debit and credit are. So, you need to get to know the concepts more closely.

In short and simply, credit is where the money went, and debit is where the money came from. Any balance sheet is always two columns: debit (always on the left) and credit (always on the right). The debit indicates the source (from where), for the credit - the target direction (where).

The basis of accounting is the record. And it's a double entry. Not double-entry bookkeeping, namely double entry - it is from it that the concept of debit and credit comes.

A simple example. Employees are paid salaries from the current account. The accounting entry (posting) will look like this: the amount on the debit of the “salary” account, the amount on the loan “current account”.

This is the meaning of the double entry: "it went out of one pocket - it came into the other." That is why debit is always equal to credit. For convenience, sometimes accountants record a debit with a plus sign, and a credit with a minus sign. That is, in this case, the balance "goes to zero."

Why is such a record necessary?

1. It's comfortable. The accountant maintains records for each account separately. Therefore, when balancing the balance, it once again checks where the funds went from and where they went. So you can check the correctness of accounting from different angles.
2. Despite the apparent complexity, such accounting greatly simplifies the work of an accountant. With its help, it is easy to build the logic of the company's expenses and incomes, track debts and analyze expenses in retrospect.

The division into debit and credit was born almost simultaneously with the birth of accounting. Accounting initially implies the existence of a source and the existence of a purpose of expenditure.

In different countries, the reflection or description of expenses may be different, but the principle is the same: there is a source (debit), there is a direction of expenses (credit).

Modern Ukrainian accounting was formed from the traditions of the Soviet one. Exactly at Soviet time the main accounting standards and methods were developed, which, having been transformed, were transferred to Ukrainian accounting. Keeping books, in particular the general ledger, is the original tradition of accounting.

That is how the name of the profession of an accountant is translated “keeper of the book”. And in the book itself, not only expenses and incomes were recorded, but also the sources of their receipt - this is how the concept of debit and credit was formed.

What are accounts payable and accounts receivable?

For an enterprise, receivables are when someone owes this enterprise (for goods, services or work), accounts payable - on the contrary: when an enterprise is indebted to another enterprise or individual-entrepreneur. Usually, the debt is taken into account on the 1st day of the month, based on the results of the quarter, six months, 9 months and the year.

For budgetary enterprises, the presence of both one and the other type of debt is always unpleasant. In principle, for the private - too, but in the case of the private - these are often exclusively the problems of the enterprise. If a budgetary organization has a debt, these are still features of managing taxpayers' money, so attention from regulatory authorities will be special.

Any payment order also contains debit and credit. Did you notice it? If not, then pay attention to it. For the organization that pays, the credit will be on the account from which the money left, and for the organization that receives, the same amount will be reflected in the debit. When the debit and credit are equal, and they should be equal, this means that the balance has "closed" or "converged".

And what to do if it didn’t close or didn’t converge? This means that the debit or credit amounts of a certain account were incorrectly reflected. For example, the same salary payment. An accountant may make a mistake and reflect the payment of salaries not from the current account, for example, but from the cash desk (cash).

Then, when balancing the balance, it will “break” the same amount on the current account and cash desk: it has not been withdrawn from the current account, and there will be a shortage in the cash desk for the same amount. Now you will know for sure why the accountant's nerves give out of the blue: just like that, you can easily confuse for quite large amounts. Professionalism, on the other hand, consists in either not making a mistake, or quickly finding it.

The principle of double entry should be considered fundamental in modern accounting. All business transactions are recorded using accounting accounts. Consider what is debit and credit. In simple words these terms mean the characteristics of a hotel account. The content of operations is reflected by recording it on the debit or credit of accounts, the final result is formed on its balances - which can also be debit or credit.

Double entry principle

Accounting, the formation of business transactions is carried out using the principle of double entry. This means that each action is fixed by an accounting entry (record) and reflected using 2 accounts. The left side of the transaction is a debit, the right side is a credit.

Why is double entry required? Each operation should reflect information about the increase or decrease in the value of the object or action in question, as well as the source of funds. For example, consider a simple posting showing the receipt of money to the current account from buyers.

Example 1 The buyer transferred to the bank account of the organization payment for the shipped goods in the amount of 33,000 rubles. An entry will appear in the seller's account:

51 (33,000 rubles) - Kt 62 (33,000 rubles) The organization's assets in the form of cash on 51 accounts increased. Accounts payable buyer on account 62 decreased.

The posting for a similar operation for the buyer will be the opposite:

Dt 60 (33,000 rubles) - Kt 51 (33,000 rubles) - payment was transferred to the supplier for the goods, which means a decrease in monetary assets in the bank account (51 accounts) of the buyer at the same time as a decrease in the debt to the supplier for the goods.

Double entry in accounting entries provides the relationship between property and the sources of their formation. As can be seen from the example, the money transferred to the current account in relation to the supplier has its own source of education - the buyer's debt is partially or completely repaid. At the same time, a decrease in the buyer's monetary assets also reduces his debt.

In this way, accounting operations using double entry, they ensure equality in the balances of the accounts involved in the organization. As a result, this leads to the balance sheet identity, in which the asset is always equal to the liability.

Account structure

Depending on the characteristics and purpose, accounting accounts conditionally divided into several categories:

1. Active. Provide information about the property of the organization and its value changes. The increase in the indicator occurs on the debit of the account, the decrease - on the credit. The account balance can be only debit or absent. The active ones are cash at the bank, cash desk, material values(goods, stocks, fixed assets).
2. Passive accounts reflect the sources and methods of formation of property and liabilities of the organization. This includes depreciation, sales margins, wages employees, authorized capital and others. The increase in liabilities and capital occurs on the credit of the account, the decrease is reflected in the debit. The balance is credit.
3. Active-passive accounts can reflect both the property of the company and the ways (sources) of its occurrence. Debit and credit entries can have different meanings. The balance in some cases is formed as a one-sided value, in others - as a two-sided (debit and credit at the same time). An example of active passive accounts is settlements with counterparties (60 accounts, 62 accounts), determination of financial results (99 accounts), and others.

Example 2 The movement is reflected using account 50. When assets are received, the debit increases, the write-off of funds is reflected in the loan. The account balance cannot be a credit.

Movement according to 50:

Interaction of debit and credit

The debit and credit turnovers of the account are involved in identifying the final balance, that is, the final balances after the operation. How to mathematically calculate the balance of an account?

If we are talking about an active account, then the debit turnover should be added to the initial debit balance and the credit turnover should be subtracted:

closing balance = Dt turnover + opening balance - Kt turnover

In the reverse order, the balance of passive accounts is calculated:

closing balance \u003d opening balance + Kt turnover - Dt turnover

Balances on active-passive accounts can be any, depending on the operations.

Total balances for reporting date form the balance sheet asset (debit balance) and its liability (credit balance). The indicators must be equal to each other.

Features of off-balance accounts

Sometimes in accounting there are specific transactions, the final results of which are not reflected in balance sheet. We are talking about assets whose sources of formation do not belong to the organization. Information about them is collected on off-balance accounts, while the principle of double entry is not applied. On the debit of the account there is an increase in the asset, on the credit - its decrease.

Example 3 As an example, we can cite goods accepted for commission (off-balance account 004):

• Dt 004 (80,000 rubles) - the goods came from the consignor;
• Kt 004 (80,000 rubles) - the goods are sold.

In organizations, accounting is based on the principle of double entry, where debit and credit accounts are used. The relationship of these indicators ensures the final equality of the balance sheet.

In contact with