2016-12-09 00:00:00Finance and AccountingEnglishDiscover five tips that accountants and bookkeepers can utilize when recording credit and debit transactions.https://quickbooks.intuit.com/ca/resources/finance-accounting/accounting-tips-5-tips-for-using-credits-and-debits/Accounting Tips: 5 Tips for Using Credits and Debits

Accounting Tips: 5 Tips for Using Credits and Debits

0 min read

Utilized in bookkeeping and accounting, credits and debits are key parts of the double entry system, which refers to a method of recording transactions that affects two accounts or more. Here are five tips for recording credits and debits:

  1. For every credit entry, a separate account must receive a debit entry of an equal amount.
  2. Use a T-account to illustrate the credit and debit effect on account balances.
  3. Expense accounts are usually debited. For example, a firm debits rent expense when it pays rent. It debits advertising expense if it runs an advertisement in the newspaper.
  4. Revenue accounts are nearly always credited. When a retailer sells a shirt, it credits sales. If a bank realizes interest on a loan, loan interest revenues gets credited.
  5. Assets and liabilities have both credit and debit entries. However, assets normally have debit balances, while liabilities usually have credit balances.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Choose The Best Accounting Software For You

Choosing the right accounting software is a critical decision for any small…

Read more

Accounting Software for Contractors - Why You Need It

Contractors require different accounting processes than traditional businesses. Using dedicated contractor accounting…

Read more

Quebec's Treatment of Income from Tips and Gratuities

In Quebec, Revenu Quebec is the provincial equivalent of the Canada Revenue…

Read more