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Here's something that always trips me up when I look into non professional software for double entry accounting (or more accurately, instructions around them).
by asdajksah2123 3y ago
Here's something that always trips me up when I look into non professional software for double entry accounting (or more accurately, instructions around them).
It's been a long time, so I may be getting it wrong, but I do have some introductory information of accounting. And according to that, in a transaction such as salary received, the accounting would look something like:
Income: Salary - Credit
Assets: Checking - Debit.
The Golden rule/s that apply here (Debit the receiver, credit the giver)
However, looking at the tutorial, the example given is:
2022/01/01 Salary
Income:Salary:Acme (Debit Account)
Assets:Checking (Credit Account)
This is the opposite of what I expect, however, I see this all the time when looking at tutorials/information written by SW devs.
What am I missing or is everyone else just getting it wrong?
- thuruv 3y agoThats correct with DE accounting. However I always assumed, the logic followed here is that the money has been "debited from" the INCOME account and "CREDITED to" Assets/Checkings.
- john2x 3y agoDebit from employer's account, credited to your bank.
- asadjb 3y agoMy somewhat limited understanding of this is that from your perspective, an increase in your asset/cash account would be a debit. A big confusion for me initially was that my banks always talked about crediting my account whenever money was deposited/added to my account. I finally understood it when I realized that from the banks perspective, an increase in my account is an increase in their liability towards me; they now owe me more money. Which is why they call it crediting my account. So now I think of it like this: an increase in an asset is always a debit, an increase in liability is always a credit.
- PopAlongKid 3y ago"Debits and credits are nothing more than “increases” and “decreases” to accounts." Don't try to apply logic; it is just a convention: debits to the left, credits to the right. In particular, the first example above is correct. An asset account is increased by debits; a credit increases a revenue account. Salary received: Income: Salary - Credit Assets: Checking - Debit.
- elbasti 3y agoThe gnuCash documentation has it as you describe: debits checking and credits salary. https://stuff.mit.edu/afs/sipb/project/gnucash/1.6.4/arch/i386_linux24/share/gnome/help/gnucash/C/xacc-doubleuse.html https://stuff.mit.edu/afs/sipb/project/gnucash/1.6.4/arch/i3...
- gunnaraasen 3y agoMost tutorials for financial services are written for bank account users. People refer to their bank account colloquially as a "debit account" and "credit account" because those are the types of accounts offered to them by a bank. From the bank's perspective, a consumer debit account is (correctly) considered a "debit" since any money deposited into the account by the account owner is an asset for the bank.