The first time I have learnt accounting, the terms ‘debit’ and ‘credit’ can be a bit puzzling. Debit is an amount entered on the left-hand side of an account. Asset and expense accounts are amplified by debiting, i.e. by entering amounts in the left-hand column. Credit is an amount entered on the right-hand side of an account. Liability, capital, and income accounts are enlarged by crediting, i.e. by inflowing amounts in the right-hand column.

The easiest method to shape out debits and credits in accounting terms are to figure out the following:

what did you receive, and where did it come from. The debit is what you received, and the credit is where you received it from, in accounting terms. So for expression sake, let’s suppose you purchased a CD with your credit card. The CD is what you got, so it will be a debit in the accounting world, and the credit will be practical to the liability you take on your credit card for the exact same amount.

The bank can simply puzzle people learning about credits and debits in the accounting logic of the terms, particularly when discussing liability. For example, when you put cash in the bank, the bank’s liability to you increases, and since liabilities are credits, they are crediting your account. And when the bank lowers their liability to us the banks are debiting the liability account, from an accounting viewpoint.

If you can shape these out for every transaction, then you’ve got the accounting terms of credit and debit downward tap.

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