Accounting- Debit and Credit

Debit and Credit



If you are not the student of commerce, you may have first question, what is the meaning of " Debit" and "Credit". Also there are so many answers by the different scholars of accounting. The father of Accounting, Luca Pacioli has never defined the meaning of Debit and Credit. But later on the meaning of Debit and Credit had introduced by the authors.

In a short, we can say that "Debit" means the left side of an account and "Credit" means the right side of the accounts. But that is not all. We will discuss it next in details.

Basis of Accounting:

There are two bases of accounting that should be consider in the mind of an accountant while recording the transaction:

(1) Accrual basis of accounting and

(2) Cash basis of accounting.

(1) Accrual basis of accounting:

Accrual basis of accounting dictates that revenue should be recorded only when it is earned and expenses should be recorded only when it is occur-ed. This is the most scientific method of recording transactions.

(2) Cash basis of accounting:

On the other hand, cash basis of accounting only dictates that revenue should be recorded only when it is received rather than when it is earned. And expenses should be recorded only when it is paid rather than when it is occur-ed.