Accounting Credit

To follow up on my post from yesterday, the "Credit" is the opposite of the debit in that it means to place the concerned transaction to the right side of the T-account.

However, credit also has other meanings.  To 'offer credit' means to allow someone the opportunity to pay for something at a later stage. 'Bank credit' means an approval from the bank to borrow money usually up to a specified limit.

Credit has other meanings for example when used in words such as credit card, credit ratings, etc.  However, my focus for now is on accounting terminology and so we will skip a lot of these words. If you have other instances where the word credit shows up from an accounting perspective, do let us know and we will be happy to add the meanings for you.

Accounting Debit!

Its often taken for granted! But this simple word drives many of my students crazy!! They faculty just go on with debit the plant account, debit the bank account, debit the shareholders equity account, debit cash........

Just what the hell is debit is what one of my students asked this week. It is so basic a question and fundamental to understanding the rest of accounting and so I thought it is worth the first post on this blog!

Debit just means the left side of your T-account!! Thats it!

Debit the plant account means place the dollar value on the left side of your plant T-account. Too good to be true!? Now take a break, breath in deeply and come back for more accounting soon! You will enjoy it.