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Answer Posted / naveen
credit and debit have only one meaning in Accounting.
Debit means the left side of an account, Credit means the
right side of an account.
The way accounts increase or decrease depend on the
account's normal balance. Cash has a normal debit balance,
meaning it increases on the left side of an account. So if
you get 500 hundred dollars cash you debit the account 500
dollars. Likewise if you lose 500 dollars cash you would
credit it 500 dollars (decrease).
Accounts with a credit balance like liabilities such as
Accounts Payable increase when you credit them, and decrease
when you debit them. When you take a loan out for 100,000
dollars, your Accounts Payable is credited 100,000 because
your increasing the right side of the account. Likewise when
you start paying it off, You debit what you are paying
because you are decreasing the amount you know.
Hopefully from these examples you understand that debit and
credit are not reversable, they always mean left and right.
Whether or not an account increases or decreases depends on
an accounts normal balance (credit balance or debit
balance). I think therein lies the confusion.
| Is This Answer Correct ? | 10 Yes | 3 No |
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