Debit and credit are two terms that are specific to the work of an accountant. Moreover, the study of accounting science just begins with an explanation of the basics of double entry. Debit is the column on the left and credit is on the right. At first everything looks very simple, but in reality it turns out to be much more complicated. From a university accounting course , students usually only remember that debit is debts that will be returned to us soon.
However, in real life, it turns out that there are passive accounts on which everything is reflected quite the opposite. And that we have not even begun to talk about
active-passive accounts. Therefore, it is impossible to say unequivocally that credit is the debts of our company to partners.
If we mean strictly active accounts, then when reflecting business transactions on them, the property rights of the enterprise or its costs are recorded on the left side. As for passive accounts, here the debit is the revenue of the enterprise or its costs. Therefore, it makes no sense to talk about the debit and credit of the posting separately from the direct account that affects this posting.
If the amount on the right side of the balance sheet is greater than on the left side, then in the case of active-passive and active accounts, this means that the value of the property of the organization is reduced. On the other hand, a credit balance on a passive account is possible only with an increase in the ownership or debt of an enterprise to its counterparties.
Let's look at what these concepts of accounting mean by a general example that is understandable even to a simple layman. Imagine moving from credit to debit is your way from one point to another. Let's say we got 5 liters of water from a well. In this case, the bucket is a debit. A loan is a well in which the volume of water has decreased by 5 liters.
Other accounting terms are easy enough to understand. The opening balance is the balance of funds in a particular account at the beginning of the reporting period (year, month, quarter), and the final balance is at the end of this period. Some scholars give these terms other names: "incoming balance" and "outgoing balance."
In the end, I would like to tell a story about one young accountant who managed to succeed in life. This story has become a professional joke today. So, a graduate of one of the higher economic institutions got a job in an accounting office. He turned out to be a good specialist, and his affairs quickly went uphill. But he had one oddity that none of his colleagues could figure out. Every day, when he came to work, he unlocked the top drawer of his desktop and looked in there, and then he began his daily affairs. Year after year passed, and he became the chief accountant, got his own office, but he did not give up the habit of starting the working day in this way. Many curious colleagues tried to see what was in the box, but it was always locked. And so our accountant retired, and then, hacking the top drawer of the table, colleagues found that there was one single note on which was written in large letters: "LOAN - on the right, DEBIT - on the left."