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Answer Posted / satyakieducation
The entire accounting universe depends upon two simple
words i.e., Debit and Credit. I sincerely approached so
many professionals and made a serious search in the
accounts related web sites to know the exact meaning of the
above two words but so far I didn’t get satisfactory answer
from those sources. My sincere and serious opinion
regarding the accounting subject is, it is a very simple
and easy that anybody can learn with or without commerce
background and make it as a useful instrument to earn their
lively hood. I want to explain all and even to the layman
the meaning of Debit and Credit. Now I am making an attempt
to explain the meaning of the above two important words.
According to me Debit is the Utilization and Credit is the
Source. Since my entry into the study of commerce till
today I didn’t find the accurate meaning in the text books
about the above two words. As you all aware that Debit and
credit were defined well in advance the classification of
accounts. The founder of double entry system explained us
the procedure to apply the rules of Debit and Credit thru
the classifications he made. But so many which I came
acrossed told me that Debit and credit differ from one to
another. Everybody try to convince the other thru different
applications of Debit and Credit in the categorizations of
accounts. But that is not real and universal convincing. So
I tried to convince you all. I think you will accept me
as the first person explained after thorough search in the
web sites and the text books. Now thru the following
examples I will justify my answer.
1. Personal Accounts
According to personal accounts the Debit and Credit rules
are .Debit the receiver and credit the giver. Ex: Sri Ram
brought Rs 100000/- as initial capital. Thru this we can
justify the answer like this. As Sri Ram brought capital
his account will be credited because of the source of
investment into the business and regarding Debit we have to
think why? And How? the source was brought in, then we
will get the answer like this. Capital was brought in the
form of cash to start his dreamed project and to run the
show. Sometimes capital may brought in the form of
Vehicles, furniture, goods and cash. So in those
circumstances my Question how it was brought in will be
answered as along with cash other things were also brought
in.
2Real Accounts
According to real accounts Debit what comes in and Credit
what goes out. I will justify my answer thru the following
transaction. Machinery was purchased for cash. Here Cash
was the source to purchase Machinery and was utilized to
acquire the asset.
3. Nominal Accounts
According to nominal accounts the rule is Debit all
expenses and Credit all incomes. In this also I will
justify my answer thru this explanation. Salaries were paid
Rs 10000/- To meet the salaries obligation Cash was
utilized as source. So I think with the above explanations
you may satisfy with my meaningful discussion. I am ready
clarify anything regarding definition.Please make a comment
on my answer.
| Is This Answer Correct ? | 3 Yes | 0 No |
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