Debits and Credits

Debits And Credits

Debit and credit are the two fundamental aspects of every financial transaction in the double-entry bookkeeping system in which every debit transaction must have a corresponding credit transaction(s) and vice versa.

Debits and credits are a system of notation used in bookkeeping to determine how to record any financial transaction. In financial accounting or bookkeeping, "Dr" (Debit) means left side of a ledger account and "Cr" (Credit) is the right side of a ledger account.

To determine whether one must debit or credit a specific account we use the modern accounting equation approach which consists of five accounting elements or rules. An alternative to this approach is to make use of the traditional three rules of accounting for: Real accounts, Personal accounts, and Nominal accounts to determine whether to debit or credit an account.

Read more about Debits And Credits:  Aspects of Transactions, Commercial Understanding, Terminology, The Five Accounting Elements, Principle, "T" Accounts, Contra Account, Real, Personal, and Nominal Accounts, History

Other articles related to "debits and credits, debit, credit, credits, debits, and credits":

Debits And Credits - History
... While the actual origin of the terms debit and credit is unknown, the first known recorded use of the terms is Venetian Luca Pacioli's 1494 work, Summa de Arithmetica, Geometria, Proportioni et Proportionalita (transla ... his work was translated, the Latin words debere and credere became the English debit and credit ... The abbreviations Dr (for debit) and Cr (for credit) likely derive from the original Latin ...
Double-entry Bookkeeping System - Debits and Credits
... These changes are made by debits and credits to the accounts ... Whether one uses a debit or credit to increase or decrease an account depends on the normal balance of the account ... accounts (on the left side of the equation) have a normal balance of debit ...
General Ledger
... Posting is the process of recording amounts as credits, (right side), and amounts as debits, (left side), in the pages of the general ledger ... stage of the financial statement preparation process, to ensure the equality of the total debits and credits ... Because each bookkeeping entry debits one account and credits another account in an equal amount, the double-entry bookkeeping system helps ensure that the general ledger ...