Double entry dilemma "why does it credit and not otherwise?"

It is common to learn that students do not know how to post a double entry for business transactions or based on source documents. They simply do not know what to credit or debit. Double entry is basically a system used in accounting world for recording. A debit entry in one account corresponds with a credit entry in another account. How to record a double entry is the key fundamental every accounting student should master with. Thus it is crucial to share some quick leaning method on this.



There are five major catergories of accounts and how will they change when come to credit and debit:-



1) Revenue -Debit (Decr); Credit (Incr):e.g Sales,interest,dividend and etc

2) Expense -Debit (Incr); Credit (Decr):e.g Salaris and wages, rental and etc

3) Asset-Debit (Incr); Credit (Decr):e.g Cash, debtors, land and building and etc

4) Liability-Debit (Decr);Credit (Incr):e.g Creditors, accruals, loan and etc

5) Equity-Debit (Decr);Credit (Incr):e.g Capital and retained earning



Whenever come across with these accounts, you should always remember how will they correspond to double entry. For example, when you are asked to record a sale made to Customer A for an amount of RM325 with a credit term of 30 days. We need to increase the debtor amount thus we debit customer A (debtor) RM325 and credit the sales (revenue)RM 325.



Another typical exmple is, when we pay our rental of RM 500 for May'08 using the cash in hand, we should debit the rental account (expense) RM 500 and credit the cash in hand account RM 500. As cash flew out now.



Hope this would help you to clear your doubts over the double entry dilemma.