> Sometimes non-accounting people get hung-up on the words "debit" and "credit"
In took an undergrad accounting class centuries ago. I'm a CS major, but we were required to take a beginner class in accounting, which in retrospect was a good thing.
In the accounting class (the double-entry bookkeeping part), for any transaction two accounts were involved:
- Money was "debited" into one account. ie., money came into that amount (balance increased)
- That same money was "credited" from another account. ie., money left that account (balance decreased).
However, my bank seems to use the terminology in the opposite way. If $10 comes into my bank account, I get a message saying "$10 was credited into your account".
Likewise, if I send money elsewhere the message would be "$10 was debited from my account".
I'm told that if you look at it in some convoluted way the meaning of "debit" and "credit" is infact the same, even though at first glance is seems to be the opposite.
Now that I think about it, there was something to do with "asset", "liability" etc, on which the meaning of the terms depended on.
> If $10 comes into my bank account, I get a message saying "$10 was credited into your account".
That's because you are a creditor to the bank. After you put cash into your bank account, the bank owes you cash. You are lending them your cash, and the more you lend them, the more of a creditor you are. That's why they say your account is in credit.
When you take too much cash out of the bank, it's obvious you are a debtor to the bank. You owe them. You're in debt to them. That's why taking cash out is called debiting. The more you take out, the closer to a debtor you become, though hopefully on balance you've been more of a creditor than a debtor.
On the bank's books your account is a liability (money the bank owes you). Simplistically, when you deposit money the bank's cash balance is debited and your account is credited.
In took an undergrad accounting class centuries ago. I'm a CS major, but we were required to take a beginner class in accounting, which in retrospect was a good thing.
In the accounting class (the double-entry bookkeeping part), for any transaction two accounts were involved:
- Money was "debited" into one account. ie., money came into that amount (balance increased)
- That same money was "credited" from another account. ie., money left that account (balance decreased).
However, my bank seems to use the terminology in the opposite way. If $10 comes into my bank account, I get a message saying "$10 was credited into your account".
Likewise, if I send money elsewhere the message would be "$10 was debited from my account".
I'm told that if you look at it in some convoluted way the meaning of "debit" and "credit" is infact the same, even though at first glance is seems to be the opposite.
Now that I think about it, there was something to do with "asset", "liability" etc, on which the meaning of the terms depended on.