Debit and Credit?

Question

Can anyone explain these terms to me? I know the 3 definitions viz:

- Debit that comes in credit that goes out
- Debit the receiver credit the giver
- Debit all expenses and losses credit all income and gains

But these definitions confuse me and sometimes seems to be contradicting eachother. Can someone help?

Answer 1

These are accounting /bookkeeping terminologies use to record business transaction. For every business transaction, there are always two sides - what you get and what you employ to get it. Example: If you borrow money from the bank - you debit Cash because this is what you got; and credit Liability to the bank. If you then use this money to buy property, you debit asset (the property) and credit cash.
When you repay the loan from the bank, you debit the Liability to the bank ( to offset the previous liability) and credit your Cash.
Also, you are correct to say that all expenses/losses are debit and income/gains as credit. Example: If you write a cheque to pay for expenses; you debit Expense and credit Cash.
If you receive interest from the bank for your bank deposit , you debit Cash and credit Interest income.

Answer 2

Using a debit/credit card is really simple. If you use it as a debit card when making a purchase, your bank account is immediately debited, (money is taken out), for the amount of the purchase. When you use the debit/credit card as a credit card then the amount of the purchase is charged to your credit card limit and you will be billed later for the charge. It can take a couple to three days for the charge to hit your account. You then have the option to pay the charge off in full when billed or only pay a portion, but your checking account is not effected. Only when you use the card as a debit card, does your checking account get immediately debited for the amount of the purchase. Debit means take out. Charge means add on to the amount owed, and when you make a payment on the charge card account, they give you a credit for the amount of the payment. You can pay the credit card by automatically having the credit card company debit your bank account for an amount each month. When this is done they take out from your checking account, which is a debit, and then they will credit your charge account balance for the same amount, which is reducing the amount of your debt, (which in essence is debiting the balance that you owe, because it is taking away from the amount of your debt. Just remember debit -- taking away money, and credit --- reducing what you owe or adding money to your bank account in a positive manner.

Answer 3

For accounting:

debit the asset account increases that balance
credit the liability account increases that balance
debit the expense account increases that balance
credit the income account increases that balance

Whenever you do a journal entry, there should be 2 parts, a debit and a credit. Say you are buying something. You credit cash (decrease your cash balance) and debit the asset (increase the asset balance).

I don't really like those rules you've given, but I'll try to match the scenario. Think of it in terms of your books. So an asset came in, so you're debiting the asset. You're crediting your cash because cash went out. It has nothing to do with how the seller treats it in their own books.

Answer 4

if it is a DEBIT card, you will only use the money that you have.
so it is always taking away from the money you have.

if it is a CREDIT card, the money you spend is based on credit - so it's not your money (so you'll probably be paying back alot more money in interest).


if you don't have an endless supply of money whenever you need it, a debit card is the way to go. you only spend what you have - but you can also have an overdraft (which works like credit).

credit cards get people into alot of debt.


were you even talking about debit and credit CARDS??????

Answer 5

Debit that comes in credit that goes out

When one makes a deposit to a checking account=CREDIT
When a check is deducted from the account=DEBIT

Credits are a Plus
Debits are a Minus

The other two work the same.

Answer 6

Debits are recorded in the left column and credits are recorded in the right. Don't try to get more general than that.

Answer 7

debit is when you use a pic number and it is pulled from the account immediately. credit is when you sign the paper and could take a few days to clear