debit

Examples of debit in the following topics:

• Double-Entry Bookkeeping

  • Recording of a debit amount to one account and an equal credit amount to another account results in total debits being equal to total credits for all accounts in the general ledger.
  • Real account: Debit what comes in and credit what goes out
  • Nominal account: Debit all expenses & losses and credit all incomes & gains
  • The rules of debit and credit depend on the nature of an account.
  • Assets accounts: Debit increases in assets and credit decreases in assets

• A short history of accounting and double entry bookkeeping

  • It does this by first identifying values as either a Debit or a Credit value.
  • A Debit value will always be recorded on the debit side (left hand side) of a nominal ledger account and the credit value will be recorded on the credit side (right hand side) of a nominal ledger account.
  • A nominal ledger has both a Debit (left) side and a Credit (right) side.
  • If the values on the debit side are greater than the value of the credit side of the nominal ledger then that nominal ledger is said to have a debit balance.Each transaction must be recorded on the Debit side of one nominal ledger and that same transaction and value is also recorded on the Credit side of another nominal ledger hence the expression Double-Entry (entered in two locations) one debit and one credit (Wikipedia 2009d).
  • Secondly, note that a debit to an asset account increases the value of the account and a debit to a liability (or owner's equity) account decreases its value.

• The Accounting Equation

  • For example, if the company uses cash to purchase inventory, cash is decreased (credited) and inventory is increased (debited); thus, assets as a whole remain unchanged and the equation remains in balance.
  • Likewise, as the company receives payment from its customers, accounts receivable is credited and cash is debited.

• The Fed as a Check Clearer

  • If there are sufficient funds in Person A's account, the face value of the check ($10 in this case) then moves from A to B, resulting in a debit of $10 to Person A and a credit of $10 to Person B.
  • Check clearing is defined as "the movement of a check from the depository institution at which it was deposited back to the institution on which it was written, the movement of funds in the opposite direction, and the corresponding credit and debit to the accounts involved.

• Electronic Banking

• Balance of Trade

  • This cannot be true, because all transactions involve an equal credit or debit in the account of each nation.

• Direct and Indirect Measurement

  • It is a simpler, more straight forward approach to cash flows, where each line item is a tangible form of cash credit or debit.

• Credit Cards

  • Compared to debit cards and checks, a credit card allows small short-term loans to be quickly made to a customer who need not calculate a balance remaining before every transaction, provided the total charges do not exceed the maximum credit line for the card.

• Short-Term Loans

  • Compared to debit cards and checks, a credit card allows small short-term loans to be quickly made to a customer.

• Types of Currency

  • The other part of a nation's money supply consists of bank deposits (sometimes called deposit money), ownership of which can be transferred by means of checks, debit cards, or other forms of money transfer.