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Debits and Credits for Financial Accounting

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Can someone explain debits and credits for me for financial accounting. My professor is doing a terrible job of explaining how they work.

Jun 25th, 2017

Debit and Credit Definitions

Business transactions are events that have a monetary impact on the financial statements of an organization. When accounting for these transactions, we record numbers in two accounts, where the debit column is on the left and the credit column is on the right.

In financial accounting debit and credit are simply the left and right side of a T-Account respectively. They are used to indicate the increase or decrease in certain accounts. When there is a change in an account, that change is indicated by either debiting or crediting that account according to following rules:

  • Assets and Expenses
    An increase is recorded as debit (left side)
    A decrease is recorded as credit (right side)
  • Liabilities, Equities and Revenues
    A decrease is recorded as debit (left side)
    An increase is recorded as credit (right side)
  • Contra-accounts
    Contra-accounts behave exactly in opposite way to the respective normal accounts.

Jan 27th, 2015

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