I know and sure that most of thestudents get baffled with the basics of accounts. Understanding accounting is easy if you absorb the basic concepts about debits and credits. No,do not get confused with debit cards and credit cards. These are completely different from each other. To be very simple, credit is adding up toan account, and debit is deducting froman account.
But understanding accounting debit and credit for a beginner is tough. So for them,debit is the entry in left-hand side column of any account. If it has to be markedon balance sheet, then it is present on left-hand side of balance sheet. Whereas, credit is the one on right-hand side ofan account and right-hand side of balance sheet.
Well, lately I was in touch with a few random students and asked the about debits and credits in accounts. All of them were so versatile with their answers. This is none of their faults. The thing is the words â€˜debit and creditâ€™ was created around five hundred years ago in Latin language. Then, 500 years later, these were transferred in English, and that resulted in numerous meanings of a single word in different applications.
So here I am just giving some tips that might help some students to clear up the confusions. Here are ways to understand debits and credits in a better way:
- To understand debit and credit of accounting the first necessary thing is not to confuse it with any other related topics. This will increase the confusion even more.
- Many explain debit credit like plus minus or good bad or positive negative. Even increasing or decreasing. Neither it can be explained as something increasing or decreasing.
- These are terms related to accounting used to mark duality that naturally occurs with each financial transaction in anaccount. Like money is not magic that it will appear and disappear according to this own wish. So if money is received in anaccount which has been given by others, then it is a credit, and the opposite is debit.
- These are the terms that are captured in records of books for any purpose where the flows of economic value from a place i.e. credit to another place i.e. debit.
Let me sort an example banks that provides a loan to business, so the bank loan is the first source, so it is credit, and bank account of business is the final place, so it is a debit. Therefore credit is the source and debitare the destinations, so if this technique isapplied, then you will have no more confusions about it.
- Debit and credit is nothing but the system to record all transactions that are found after each money transaction. Regarding accounts, asset is equal to liabilities plus equity. Originally the Venetian traders discovered these terms and gradually developed it over five hundred years ago.
According to their version the increase on the assets section will be considered as a debit. Whereas, the increase in the liability and equity part would be called a debit and credit for entries for the decrease. A balanced accounting equation helps the business executives to estimate and understand in details about all the transactions from all the parties.
- The last thing is debit and credit is always based on different perspective. This is the reason cash at a bank account in the passbook is a debit balance, and then the bank balance is a credit balance. Because cash is an asset of the business, but it is a liability to the banks.
So once you get the concepts, it will not be any issues to deal with the critical problems of accounts. To make it sure go through several books and explanations given on the internet. These things are not that complicated if you understand the basics.
As a result, you will not find things complicate in the exam or a day before it. But yes you will have to that with plenty time before exams. Else more confusion will cloud around you. If you are struggling with homework of all these subjects, then know the encouraging ways to make your complete their homework on time. This will help in improving your writing speed in exams.
The important part is to keep pace with the teacher of your class. What I mean to say is student must hold up. Now it is part of parents to direct the actions of their kids. Whatâ€™s being taught at school must be studied at home else, they cannot complete the huge entire syllabus.
Hence it is always prudent to move with theschool to avoid confusion in the concepts. Things must be learned properly with care, and the old ones have to revise at regular intervals. That will be a great help before the exams and also as a whole. These techniques will increase the confidence of students.
So studying in the right way will improve all the aspects of problems regarding accounts debit and credit. It is okay that students have private tuitions, but that does not make any sense not to attend the classes. Classes are real deal important to deal with all confusions!
You can achieve anything if you can work hard and follow the rules, success will follow! What are youlooking at? Show your potential and make your stand in class!