ACCOUNTING test tommorrow.need help with debits and credits?

Question

i am having soooo much trouble with understanding debits and credits and how to set up T-accounts... i just need the basics...i get confused b/c i think of debit cards and credit cards and the plus and minus factor get all screwed up..SO basically all i need is an explanation on t-accounts..how and why they need to be balanced.... and a STUPID GIRL(lol) explanation of what debit and credits are..THANK YOU SOOOOOO much in advance..p.s any extra advice is welcome.=0)

JAMES THE FLAME and BRENG you two are AWESOME thank you!!

your ALL awesome and you have all helped me thanks so much for your time=0)

Answer 1

You might try referencing the following link for an easy cheat sheet regarding debits and credits.

Basically a debit increases an asset and decreases a liability...they go on the left side of the T. Credits decrease an asset and increase a liability...they go on the right side of the T.

My little 'cheat' phrase was always "Debit!! My asset increased in size again! Shoulda left that pie alone!" That always gave me the starting point to place the rest where they go.

Hope that helps a little!

Answer 2

I am learning this right now as well. Actually, I'm just a bit past it now.

Remember this:
Assets increase on the Debit side
Libilities increase on the Credit side
Owner's Equity increases on the Credit side
Revenues increase on the Credit side
Expenses increase on the Debit side

One thing that trips up alot of people is that debit side does not always mean increase. it depends on the type of account. Look over that list above, and know that.

Remember that for each transaction, 2 accounts will be affected. One account will have a debit, and one will have a credit.
Example:
You purchase $100 worth of office supplies.
So, cash is credited $100 because it is decreasing, and office supplies is debited $100 because it is increasing.

ex2
J. Smith invests $14 000 in the business.
Cash gets debited $14 000, and Owner's Equity gets credited $14 000. Even tho both accounts are increasing, Owner's Equity gets a credit because that type of account increases on the credit side.

You asked WHY T-accounts need to be balanced? Because if they don't balance than the balance sheet won't work out properly, and you won't know the proper numbers for total assets, total liab + oe.

Answer 3

Instead of starting out by thinking in terms of debits and credits, think in terms of assets (things you own of value, things you can sell to make cash) and liabilities (things you owe to someone else). The "normal" balance in an asset account (cash, CDs, stereo equipment) will be a debit balance. The 'normal balance' in a liability account (what you owe on your credit cards) will be a credit balance.

For each transaction, the debits and credit will balance.

Then think of your T-account as being a mini checkbook. Your goal is to balance in each mini checkbook. Your beginning balance plus all your additions minus all your subtractions will equal your ending balance.

Adding to an asset is a debit (depositing money into your bank account). Subtracting from an asset account is a credit (withdrawing money via an ATM).

The exact opposite is true of liability accounts. Remember to think of the "normal balance". Label your T-Accounts with the name AND the "Normal Balance". Then memorize this:

DATA-Debit adds to an asset
CATL-Credit adds to a liability

Here's an example: You buy some new CDs worth $25 using your credit card. The transaction would be a debit to CD Inventory (Asset) because you now have more CDs and a credit to Credit Cards Due (Liability) because you now owe MORE on your credit card.

The $25 transaction had a debit and a matching credit.

The same transaction paying with cash:
Debit CD inventory, Credit cash (because it DECREASES and asset).

In your head you'd know that if you started out with $100 and spent $25 you'd still have $75. T-accounts PROVE it on paper by showing how much money (value) moved where.

If you need further help, I'm logged onto yahoo messenger under iasw2004 for about the next 30 mins.

Answer 4

Debits increase assets or expenses.
Credits increase liabilities, sales, or equity.

For T accounts, it's Debits left; credits right.

For every transaction, there is a debit to one account and a credit to another. The aggregate debits always equal the aggregate credits.

Forget all you know about your debit cards, etc. That will just confuse you. Also forget any notion of credits good/debits bad, or the reverse. That will just confuse you also.

Good luck. Study this stuff hard; it's useful.

Answer 5

just wanna come by and say i love ur answer..dont be scared...michael myers will give u a big hug!!..lol