How are debits and credits calculated? What are “Debit” and “Credit” in simple words? Accounting analysis

Accounting is one of those financial topics that cause difficulties in understanding among ordinary people. However, everyone still periodically hears two terms - credit and debit. , why it is needed and how it is reflected in accounting - we will answer all these questions in our article.

Accounting is the most important element in the activities of any commercial organization. Ultimately, every institution pursues the goal of making a profit, and this cannot be done without reporting.

Debit and credit – what does this mean in accounting? Definition in simple language: debit is the income (of funds), while credit is the expense on active accounts (on passive accounts, exactly the opposite).

Important! In simple terms: debit is the total profit of an institution received as a result of its activities in the sale of goods and services, and credit is expenses made for the purchase of raw materials, payment of wages, etc.

Requirement to Lead Accounting enshrined in law and, accordingly, is mandatory for all entrepreneurs to comply with.

Debit and credit are the foundation of accounting. The terms themselves are ancient and date back about 500 years: they were first mentioned in the Italian “Treatise on Accounts and Records” by Luca Pacioli

Note 2. On Latin“Debet” means “should”, while the word “credit” comes from “credere” - “trust”.

Accounting analysis

In practice, in order to understand that there are debits and credits, you need to know how they are reflected in accounting.

The account is a table with two columns: the right one is for entering data on the receipt of funds, the left one is for data on expenses.

This implementation of accounting when determining cash turnover is called the double entry method.

Note 3. All business operations must be entered into the table in the form of records. The data is reflected in both columns.

See the table below for an example of this practice.

How are the two phenomena different?

In accounting, credit is a term meaning reduction of assets. A logical question arises: what is an asset? This is a group of accounts included in the property complex of a commercial institution. And this includes real estate and valuables with money.

Debit, as you might guess, means increase in assets– profit and income. It doesn’t matter how one or the other is expressed – in material receipts, in the transfer of equipment, real estate, raw materials or money.

This difference is the first and main one when comparing the two phenomena.

Second point: in passive accounts, a credit reflects an increase in the institution’s debt burden, while a debit reflects a decrease.

Passive accounts are needed to organize accounting of the sources of the appearance and receipt of funds from economic activities. This refers to the salary paid to the employees of the enterprise, capital - authorized and reserve, tax and other types of fees.

Table 1. Example of implementation of accounting using the double entry method.

In principle, the very definitions of the terms already directly indicate that they mean exactly the opposite phenomena. However, consideration of the practical side brings more clarity.

Balance - what is it?

The main task of accounting comes down to calculating the balance between income and expenses. This is necessary to determine the net profit of the enterprise for a specific period of activity.

A simple formulation of the term “balance” can be reduced to three interpretations. This:

• the calculated difference between the sums of the entries;
• debit from which credit is subtracted;
• the difference between income and expenses for a fixed time period.

Note 4. If it is noted that income is greater than expenses, a debit balance is reflected in the active account. When the resulting expense is greater than income, a credit balance is reflected in the passive account.

It is logical that a company is considered profitable when the debit on active accounts is greater than the credit

Important! Profitability is always calculated at the end of the annual period. Intermediate results are never taken as a basis for assessing the work of an enterprise.

Below we will look at a specific example that explains well what debit, credit and balance are.

Example

Divided into two parts - General terms and final analysis.

Initial situation

A certain entrepreneur decided to start selling greenhouses. For this he opened outlet. The action takes place in the autumn.

To simplify the analysis of the situation, let us assume that Money, debts and even the greenhouses themselves are not yet available. At the same time, there is a potential buyer who wants to purchase three commodity units worth 100,000 rubles and leave them in storage with the seller until spring.

In this case, the chronology is as follows:

1. First stage. The buyer pays 100,000, and this amount goes to the entrepreneur’s cash desk. The first one is not receiving greenhouses yet.
2. Second phase. The businessman puts 90,000 of the amount received into his current account. The money left the cash register - this is a credit, but it came to the account - this is a debit.
3. Third stage. A search is made for a greenhouse manufacturer, after which an agreement is concluded with him in the amount of 160,000. According to the terms of the agreement, half of the amount is transferred in the first month, the second half - later. 80,000 are transferred to the manufacturer from the account.
4. Fourth stage. Greenhouses arrive for the agreed amount. In this case, the entry “160,000” is made in the credit of the supplier’s account. Debit the warehouse account with the same information.

After this we can draw conclusions.

Table 2. Calculation of debit and credit turnover at the end of the first month.

Then you need to calculate the balance for all accounts. It will be closing balance.

How is the calculation done? From higher turnover take away the smaller one.

Let's take r/s as an example. Debit turnover is 90,000, credit turnover is 80,000. The first value is larger, so here we are talking about debit balance: 90,000 - 80,000 = 10,000 rub.

Now let's turn our attention to the supplier's details. Here the debit is 80,000, and the credit is 160,000. Accordingly, balance - credit: 80,000 - 160,000 = 80,000 rub.

The same must be done for the remaining accounts.

Total

Buyer's wallet. This account has a credit balance. It means that in the spring the buyer must receive greenhouses from the entrepreneur in the amount of 100,000 rubles.

Cash register. S. – debit. There are 10,000 rubles in the cash register.

Bank account. Again, debit S., which shows the presence of 10,000 rubles on the bank account balance.

Provider. Here S. is already credit. This is a reminder of the need to give another 80,000 rubles to the manufacturer of the product.

Debit balance. Shows that the organization has greenhouses in storage - in the amount of 160,000 rubles.

Conclusion

Debit and credit are fundamental accounting phenomena. If we talk in simple words, this is the income and expenditure of certain funds. These indicators make it possible to calculate the organization’s profit for any period, which is extremely important for planning business activities.

In contact with

Reading time: 9 minutes. Views 2.5k. Published 07/29/2018

The rules for preparing financial statements are quite complex for ordinary citizens. However, many ordinary people often use concepts such as credit and debit in their speech. It should be noted that not every worker understands the meaning of these terms. Let's look at what debit and credit are in accounting for dummies, and also talk about the rules for using these terms.

The words “debit” and “credit” came to us from the Latin language

General meaning of terms

The concepts of credit and debit are considered the basis of accounting. According to historians, these terms have been in use for more than five hundred years. The founding father of accounting is considered to be the Italian mathematician Luca Pacioli. 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 that receives revenue from business activities must maintain accounting records. The main task of an accountant is to determine the amount of the company's net profit received over 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.

Let's study the question, credit and debit, what is it? When generating financial documents, two types of accounts are used: active and passive accounts. In active accounts, debit reflects the amount of income, and credit reflects the total amount of current production costs. On passive accounts, these indicators have the opposite meaning. Putting aside the complex accounting concepts, debit can be characterized as the amount of profit a company receives through the provision of services and the sale of commercial products. The loan reflects the amount of the expense item for the purchase of consumables, raw materials, payments to personnel and other production costs.

It is important to note that currently there are no enterprises that do not keep accounting records; the rules established by current legislation oblige every entrepreneur to maintain financial statements.

The main differences between the concepts

The concepts under consideration reflect the size of the company's financial resources and assets in monetary terms. These terms are a kind of basis for creating financial statements. The term “credit” is used to reflect the process of reducing assets that are recorded on the balance sheet of an enterprise. Such assets include: monetary resources, real estate, transport, commercial products and other assets of the organization. The term "debit" is used when increasing assets. In this case, in addition to the above material assets, the company’s income and profit are taken into account. It is this factor that is the key difference between the terms under consideration.

According to the rules accounting, the credit is reflected in the right column of the balance sheet, and the debit in the left. It should be noted here that depending on the form of account, the meaning of the terms may vary. In active accounts, debit is used to indicate a process characterized by an increase in assets. In the case of passive accounts, this indicator reflects a decrease in the amount of debt to third parties. From this we can conclude that debit is the total set of assets that are on the organization’s balance sheet, and credit is the resources used to obtain assets. This indicator is also used to display the value of an expense item and financial obligations to third parties.

What is debit

Accounting consists of two columns. Debit is displayed in the left column and shows the increase in the value of assets in the active account. In simple terms, this indicator is used to convey information about the amount of financial obligations of third parties to a specific organization. This concept includes cash received by the enterprise's cash desk and financial resources stored in the company's bank account.

Account types

There are about a hundred different types of accounting accounts. They can be divided into several different groups, differing in their purpose. The main debit account is a reporting item that provides information about the movement of assets and financial resources of the organization. This article demonstrates the speed of settlements with third parties acting as borrowers and lenders.

In addition to the main account, there is a regulatory account that reflects the size of the price of the enterprise's assets. The third group is operating accounts, which indicate all the company’s expenses related to economic activity. This category includes production costs, purchase of consumables and raw materials. The last group includes financial performance accounts, which compare the total amount of profit and costs associated with the use of fixed assets.

Structure

The indicator under consideration has a unique structure and consists of several components used to systematize various operations. When preparing financial statements, it is imperative to take into account the sources of information accumulation. The main sections of debit include:

1. Non-current funds– here information is provided about the company’s assets, which are part of the enterprise’s fixed assets. It is important to note that this section includes only those assets that have an intangible basis. This section also includes various operations related to the use of non-current assets.
2. Production reserves– this section provides information about the tools that are used in the course of production activities. Actual cost reserves are the total costs of their acquisition, transportation and storage in warehouses.
3. Production costs– a cost item associated with the main activities of the company. It is important to note here that expenses associated with the sale of commercial products cannot be included in this item. All enterprise costs can be divided into two categories: direct and indirect costs. The first category includes: wages of company employees, cost of raw materials and consumables, payment utilities and other expenses closely related to the production process. Go to category indirect costs include production costs aimed at improving the performance of the company.
4. Produced goods– this section contains information about the turnover of manufactured products.
5. Financial resources– information about funds belonging to the organization, which can be stored at the company’s cash desk or in a current account. This article also includes payment orders, shares, bonds and other securities.

Based on all of the above, we can conclude that the debit of the account is a list of information about the property assets and financial resources of the company that are recorded on its balance sheet.

Debit card

This card, issued to financial institutions, is linked to the current account of its owner. Such cards can be used to make various payments and withdraw cash. According to established rules, money stored on this card is equal to a bank deposit. It is important to note that such cards can only store the personal financial resources of its owner.

The main difference between debit cards is the complete absence of a credit line. This means the cardholder cannot spend more financial resources than is stored in his bank account. However, there are a number of exceptions. The cardholder may lose money when the annual fee is charged.

What is a loan

When analyzing the question, debit and credit, what they are in simple words, you should pay special attention to the last indicator. This indicator demonstrates the amount of liabilities of the enterprise and is displayed on the right side of the financial statements.

Types of accounts

The meaning of the term “credit” depends on the type of company account. There are two accounting systems used in accounting: active and passive accounts. In case of active account, credit is used to reflect the receipt or decrease in the price of property assets recorded on the company’s balance sheet. Since this part of the table records all the company’s costs that are related to property values, the value of assets gradually decreases.

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

Structure

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 activities.

Credit card

A special feature of this type of card is that it is not linked to the personal account of its holder. Having this card allows a person to use “plastic” to purchase various things, paying for the purchase itself later. Each credit card has a certain limit, upon reaching which it is blocked. All purchased goods are recorded on the account of the card itself.

Each person using this type of card is given a choice - repaying the debt during the period when the bank provides benefits (interest-free repayment) or distributing payments into several parts. If you choose the latter method, a certain percentage is added to the amount of debt. This means that quickly repaying the loan allows you to reduce the amount of commission payments. It is important to note that there are credit organizations that do not provide grace period.

Accounting (double entry)

The financial activities of the company must be reflected in the primary accounting documents. This category includes financial statements, which has a tabular form. This table is divided into two parts: the credit is recorded on the right side, and the debit is recorded on the left. T The accounting table consists of ninety-nine lines, which indicate active and passive accounts.

According to experts, the type of account has a direct impact on the meaning of debit and credit. These indicators are used to display the order of turnover of financial resources and property assets of the company.

What does "balance" mean?

The main purpose of accounting is to identify the balance between an expense item and a company's revenue. Drawing up such calculations allows you to obtain information about the amount of net profit received from the main activities of the organization. To obtain this information, you need to know the difference between debit and credit. The term “balance” is used to denote this indicator.

Debit balance is a parameter indicating that the amount of income exceeds the company’s current expenses. 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 transactions of a particular company for a specific time period. If the debit volume is significantly higher than the credit volume on active accounts, we can conclude that the company has a high financial stability.

Conclusions (+ video)

In this article we examined the question of what debit, credit, balance are and the meaning of these terms. The ability to distinguish between these values ​​will significantly reduce the risk of various difficulties associated with financial transactions. Such knowledge can be useful to ordinary citizens in order to protect themselves from unexpected expenses when using a bank card.

In contact with

Describe the concepts of “Debit” and “Credit” in the usual way(i.e., presenting the complex as a sum of simple components) will not work in short. The difficulty is that for accounting “Debit” and “Credit” these are the primary elements, fundamentals and axioms of accounting. The double entry system, which is used in all accounting operations, is based on these concepts.

On the company's balance sheet:

• Debit - means assets (money and material assets) of the organization;
• Credit is the source of these assets.

In the future, both terms do not have their own content, or rather, they change it depending on the operation.

For all balance sheet accounts, the sum of all debits must necessarily be equal to the sum of all credits.

Debit account 60 “Settlements with suppliers and contractors” - Credit account 50 “Cash”.

Another case is that materials have been supplied, but payment has not been made. The wiring will look like this:

Debit account 10 “Materials” - Credit account 60 “Settlements with suppliers and contractors”.

Some accounts have such extensive content that they are divided into several subaccounts. Example - account 91 “Other income and expenses”. It has five sub-accounts:

• 91-1 - “Other income”;
• 91-2 - “Value added tax”;
• 91-3 - “Other taxes and fees calculated from other income”;
• 91-4 - “Other expenses”;
• 91-5 - “Balance of other income and expenses.”

In the postings it will not be enough to indicate “Debit 91” or “Credit 91”, but Debit or Credit of specific subaccounts.

If you notice an error in the text, please highlight it and press Ctrl+Enter

What are accounting accounts? Why are they needed, what are debit and credit? In the article we will deal with one more basic concept accounting – accounting account. It may not be that interesting, but it is a theory without which further accounting training will not be possible. If you understand what an account and posting is, then you will understand all accounting.

I will not give an abstruse and official definition here; you can easily find it in any textbook; I will try to explain what counting is and why it is needed in simple words.

An accounting account is essentially a table consisting of two columns: the left side is called “debit”, the right side is called “credit”. There are 99 of them in total, each separate account is designed to record certain business transactions. For example, cash is accounted for on account 50 “Cash”, materials on account 10 “Materials”. All 99 accounts are recorded in a special book called the “Chart of Accounts”.

All business transactions are expressed in monetary terms, and the accounting accounts reflect exactly the amounts expressed in rubles. The debit records the amount of receipts, and the credit records the amount of disposal. For example, to the debit of the account. 50 “Cash desk” records the amounts of cash received at the cash desk, and the credit – amounts issued from the cash register.

All business transactions performed at the enterprise are grouped according to homogeneous characteristics, and homogeneous transactions are recorded on one accounting account. For example, all interactions with suppliers are reflected in the account. 60 “Settlements with suppliers”, and interactions with customers - on the account. 62 “Settlements with customers.”

How to learn the Chart of Accounts?

99 bills seems like a lot, and it’s impossible to remember them. It's not that scary. In practice, not everyone uses an accountant. The number of accounts used depends on the company. For a small business, twenty may be enough. At the beginning of the organization’s activities, the necessary accounts are selected from the Plan, which will be necessary to record transactions specific to this organization. The selected list is recorded in accounting policy enterprises, we will talk more about this policy later.

When the accounts that will be used in the daily activities of the enterprise have been determined, all that remains is to record each transaction on these accounts using postings. Read how to make postings. At the end of the month, each account is closed, debit turnover and credit turnover are calculated, and the final balance is displayed. At the beginning of the next month, all accounts are reopened, the ending balance from the previous month is transferred to the new month, and further accounting of transactions continues.

Video: How the Chart of Accounts works

Example of transaction accounting

To help you understand how the accounting process works on an accounting account, let's look at a simple example. For example, let’s take , in which we will take into account cash.

During the month, we will enter in debit the amount of cash received at the cash desk of the enterprise. We will enter into credit the amounts of cash leaving the enterprise's cash register.

July: for the month the following amounts were received at the cash desk: 500 rubles, 1000 rubles. and 2000 rubles, amounts of 300 rubles were paid from the cash register. and 900 rub. How can we reflect these amounts on the account? 50 "Cashier"?

Look at the figure, the amounts for the month are shown in black: receipts in the debit, disposals in the credit.

The end of July has arrived and the account needs to be closed. To do this, we calculate the debit turnover (the sum of all numbers on the left side) and the credit turnover (the sum of all values ​​on the right side).

In our example, debit turnover is 3,500 rubles, credit turnover is 1,200 rubles.

Next, you need to calculate the final account balance; to do this, subtract the credit turnover from the debit turnover. If the resulting value is positive, then the balance is debit, and it is written as a debit (as in our case, shown in red in the figure), if the resulting value is negative, then the balance is credit, and we write it as a credit.

August: a new month has begun. Our account 50 needs to be reopened. To do this, we take a new two-sided table, transfer the ending balance from July into it, the debit balance is transferred to the debit, and the credit balance, respectively, to the credit. In our case, the balance is debit, we write it in the debit of the new account, this balance will be called the opening balance.

It is shown in green in the figure. Next, we continue to record all cash inflows and outflows through debit and credit throughout August. Let’s say 2,000 rubles were received in August. and 400 rubles were lost. These amounts are shown in black in the figure.

The end of August comes, we again count the turnover of debit and credit (2000 and 400 rubles, respectively). Next, you need to take into account the initial debit balance, add the debit turnover to it and get the final debit balance. Then we subtract the credit balance from the final debit balance and get the final account balance. 50 "Cashier".

This process continues month after month on each accounting account. This is what accounting accounts will do.

Did you notice that in both months we had a debit balance? This is not accidental; it cannot be any other way with this account. After all, if there is a credit balance, this will mean that more money has left the cash register than is there. This can't be true. Therefore, at the account. 50 “Cash” the final balance is always a debit. Such accounts are called active in accounting. There are other active accounts. And there are passive ones, and then there are active-passive ones. But we'll talk about this in another article.

About active, passive and active-passive accounts, as well as how to easily determine the type of accounting account, read the article - “

The article explains what credit and debit are in accounting, why active and passive accounts are needed, and provides a clear example of calculation.

Issues related to finances always surprise those who do not deal with them on a daily basis. Credit, debit and other professional terminology are not easy to understand. Especially for novice businessmen who, upon delivery tax reporting they grab their heads and ask: “Debit and credit - what are they?” This article will talk about these concepts in simple words.

Binary notation

It so happened historically that all financial and economic transactions are reflected using binary notation. This was done in order to understand what assets the business has and how they were obtained. In this way, you can evaluate the effectiveness of business activities and make the right strategic decisions.

A record of any action carried out in a business is recorded in the transaction journal using its essence and two figures 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 the 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 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 provides an understanding of where funds came from and where they went, and in a broader sense, what credit and debit are in accounting.

What is debit?

As already described above, binary notation is needed in order to understand the origin of assets and the appropriateness of their use. What the company has, including other people’s debt to it, is reflected in debit accounts. Debit is the left column in the statements. Here fixed assets are accumulated, all property is taken into account, as well as profit.

What is a loan?

To understand how the acquisition of the property that an enterprise has is achieved, the concept of a credit account is used. Credit is the right column of the statement. It shows how much the company owes, how funds are distributed, and what brings the main profit. In simple terms- this is the expense of assets that are located in debit.

Credit and debit turnover

Due to the fact that when counting financial result the binary notation of the operation is used, it is easy to say in what favor it was carried out. For example, if we withdraw money from a cash register and send it to a checking account, then in accounting parlance we write off those funds as a credit and record them as a debit. There can be a large number of such transactions per month, so certain statistics are carried out at the end of the reporting period. From the amount that came into debit, the amount that went out is subtracted. This is called debit turnover. The same goes for credit. In this way, we can trace the movement of values ​​right up to the operation and make the right management decision.

What is a balance?

After we have counted all the revolutions, it is necessary to identify the difference between the larger and smaller numbers. If the debit figure is higher, then the balance, that is, the balance between income and expenses for the period, is debit. This gives us an idea of ​​how well the reporting period went and allows us to adjust income and expenses to arrive at the final balance sheet.

Active and passive accounts

Accounting also divides all accounts into two types: active and passive. The first are the funds in monetary equivalent that the enterprise has. The opening and closing balances of these accounts are always debit. The latter always show a change in the sources of the company's assets. Accordingly, the balance at the beginning and end of the period is always in credit. They always show the total debt to banks and counterparties, depreciation charges and a decrease or increase in capital. Thus, we can say that a debit account is active, and a credit account is passive.

Calculation examples

To clearly understand what credit and debit are, let's look at a simple example.

Suppose you decide to open a clothing store and sell your first order in the amount of 5,000 rubles. Part of the amount, 2,000 rubles, is decided to be deposited in a bank account. What came in is taken into account in the “Debit” column, and what went out is taken into account as credit. In the statement, this operation will look like this:

Cash desk (count 50):

Customer (account 62):

It's time to sum up the first month of work. We calculate the amounts of debit and credit turnover(those that have accumulated in the relevant accounts).

Cash register: 5000 – 2000 = 3000 rubles. The first amount is larger, therefore, according to the results, it is recorded in the debit part.

Checking account: 2000 – 1000 = 1000 rubles - the same thing.

Customer: 1000 – 4000 = 3000 rubles - here the situation is the opposite, that is, the second figure is larger. Accordingly, it goes to the right side of the column - on credit.

Stock: 4000 rubles.

Thus, the debit balance makes it clear what assets we currently have, and the credit balance does not let us forget that we owe the supplier part of the funds for the order.

In the next reporting period We transfer all the data obtained as a result of the work. This will be called the opening balance.

Of course, the example considered is quite primitive, and the titles of the articles are conditional. However, it clearly shows what the terms “credit” and “debit” mean, how they are interconnected and how the turnover between them takes place. Of course, accounting is a more complex and time-consuming process.