My wife wants a job at the school basically writing checks for the school and keeping the checkbook in balance. She will have to take a simple accounting test. She's worked for banks for years working jobs such as being a teller to being a loan officer but this doesn't make sense to her or me. http://www.accountingcoach.com/online-accounting-course/accounting-bookkeeping.html These statements sound backwards but I'm sure it is not: Debit the Cash account when cash is received Credit the Cash account when cash is paid out Can someone explain these statements? If I receive cash, why wouldn't I credit the cash account?
Debits are on the "left" and credits on the "right" Cash is an asset and assets have a debit balance. Therefore, a increase in cash would debit the account. Payment or decrease in cash would credit the account. Liabilities have a credit balance. If you increase a payable you credit the account. If you reduce a payable you debit it.
Backwards? Assets carry a normal debit balance. When you receive cash you record it as a debit. When you pay out cash you record that as a credit and debit your accounts payable. Debit means left and credit means right and nothing else.
All transactions have debits and credits. They must balance within the transaction. Example...a customer pays $100 toward his delinquent account. Debtor Cash $100 (balance increased) Credit Accounts Receivable $100 (balance decreased)
You can't think of it like the debits and credits you're used to. In the double-entry accounting system, all transactions have debits and credits and accounts in the 3 classes (assets, liabilities and stockholders equity) are increased/decreased in a particular way and are offset. Assets = Liabilities + Stockholders Equity Assets - Cash, fixed assets, accounts recievable, etc Increase - debit decrease - credit Liabilities - Payables, Bonds, etc... Increase - credit Decrease - debit stockholders equity - common stock, retained earnings, paid in capital Increase - credit decrease - debit Hope this helps
this is easy... if you are taking money out of cash... what are you doing with it? spending it on an expense. everything has to have an opposite side.
I can see why it doesn't make sense. I worked at a bank as a teller before I went to college and stated taking accounting classes and at first, the "concept" of debits/credits didn't make sense to me either. It's because at a bank, you are used to debit = less money in the account and credit = more money in the account. But yeah, read the other entries for good answers to your question.
There is an example at the bottom of the page in your link: If a company borrows $10,000 from its bank, the company debits its Cash account for $10,000 and credits its Notes Payable account for $10,000. I think you need to understand the meaning of Cash account to avoid the confusion.
+A- -L+ -O+ -R+ +E- Cash is an asset (A). You are increasing cash if you receive it (+), so you debit it (on left).
