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> The "credit" and "debit" terminology is ridiculous because their definitions swap around depending on which account I find it easy to just think of debit as
by abtinf 3y ago
> The "credit" and "debit" terminology is ridiculous because their definitions swap around depending on which account
I find it easy to just think of debit as adding to the left and credit as adding to the right. Their definitions are always the same that way.
- lisper 3y agoBut that just begs the question because you have to remember the arbitrary assignments of what things go on the left and what things go on the right.
- freedomben 3y agoIt's easy! Debits add to the left, credits add to the right :-) (to be clear, I'm backing up your point by giving the same circular explanation that I got constantly through Accounting 101 and 102, and then occasionally after that when dealing with the books)
- lisper 3y agoYeah, they should be called leftits and rightits. Or CARs and CDRs.
- nuttingd 3y agoIt's the accounting equation being represented in canonical form. A chart of accounts is visualized in the minds of an accountant as: Assets | Liabilities + Equity Accounts classified as assets are debit accounts (left side), and accounts classified as liabilities or equity are credit accounts (right side). The theory discussed everywhere in this thread is sound. You really don't need to use terminology like debit/credit for accounting. What the discussion misses is the application of this framework. It is useful for a human to be able to visualize a complex transaction and work through missing pieces with the hints this framework provides. I'm missing something on the left? Oh yeah, I missed the deferred revenue debit.
- lisper 3y ago> You really don't need to use terminology like debit/credit for accounting. That's exactly right -- you don't need to. The problem is that people do use this terminology, and they use it in a way that conflicts with common usage, which makes a very simple concept vastly more confusing than it needs to be.
- nlitened 3y ago> That's exactly right -- you don't need to. The problem is that people do use this terminology, and they use it in a way that conflicts with common usage I used to think that way, then I understood this thinking is the exact opposite of what’s happening. Hundred million people on earth know how to work with debit and credit exactly as it has been written in accounting books for hundreds of years. When you need to expand your accounting department, you go and hire a person who understands things exactly the same way as your current accountants, can pick up their work, they can communicate effectively. As a CEO, you are spared of teaching every new junior accountant your own flavor of first-principles accounting, you don’t need to write your custom accounting software, and convert your company’s books for tax authorities and outside auditors who are not familiar with your system. Same with music notation. Same with Java language. Same with every other piece of human knowledge.
- lisper 3y ago> Java language That's actually a pretty good analogy. There is a lot in Java that could be improved too.
- ChirronT447 3y agoThat's because people are trained into the system. If you started teaching it another way, eventually that other way would be the norm.
- nlitened 3y agoIt should be tangibly 10x—100x better than what's already out there for people to switch. If you make something marginally better (and by default anything unknown is much worse than what everybody knows already), nobody will bother.