The main basic of double entry in accounting must be well understood. I had been emphasizing too many a times that DEBIT is not always adding into accounts and CREDIT is not always deducting from accounts! Debit and Credit are just ‘Left and Right’ of any accounts. Whether it represents an addition or deduction from an account depends on its nature. What is the nature of accounts? If an account is to be CREDIT to add into it, then its nature is a credit nature. Eg, Liabilities are credit nature so, credit is +.
The nature of Assets and Expense are Debit and for Liabilities, Capital and Income are credit. New POA students have to remember this basic hard embedded into the head. If you can’t then, remember ‘ALICE’! (See above for the ALICE table)
As noted in the ALICE table, DEBIT Nature items only had 2 namely, Assets and Expenses while the CREDIT Nature items had 3 – Liabilities, Income and Expense. So, in other words, you have more accounts classes that has CREDIT as + then DEBIT.
So, stop thinking that DEBIT is + and CREDIT is –
If you want to know the techniques to learn for learning Principles of Accounts (POA), read up Learning Principles of Accounts (POA) and Scoring As.
Felix Lim is the coach for Principles of Accounts (POA) Tuition class in Edulight Learning Hub. Experience in the line of coach Principles of Accounts (POA) for over 10 years, he understood well how students learn through the wrong methods. He seeks to correct the wrong methods of learning in Principles of Accounts (POA) and advocate “Understanding not Memorizing” in his teachings.
You can visit Edulight Learning Hub to understand more about him and his tuition sessions.