Often we learn accounting starts from Debit and Credit transactions without knowing what is going on the debit and credit, To understand the concept of debits and credits should be started from the illustrations of daily transactions to yourself.
To understand the concept of debits and credits, we have to do is:
1. First we must know that the transaction from the accounting involved only 5 (five) elements of the transaction, the assets (assets), liabilities (debts), Equity / Capital (capital), Revenue and Cost / Expense.
In understanding the meaning or definition of the five elements of the transaction, try to use his own terms if the proposed definition or opinion of experts in accounting theory quite confusing. For definitions of the five elements, I try to define in a simple definition of the five elements of accounting as follows:
Assets are all the wealth we possess, both to myself and the bills on the other hand, assets that we have to come from their own business or loan from another party does not include assets from the lease
The obligation is a commitment we pay to the other party as a result we have received loans
Capital is the investment or the giving of oneself or others to start a business or in order to increase business.
Revenue is received in the delivery of services or goods
Cost / expense is spending an asset or assets that will be issued in connection with the service that we received or expenditures for which we do business
2. Instill in us that in the accounting, each debit transaction to be followed by a credit transaction as an opponent
3. With a simple transaction that make the concept of debits and credits associated with the 5 (five) elements of accounting, as follows:
a. Example 1: Suppose there are receiving paychecks in January 2010 amounted to Rp 5.000.000, -
Based on the transaction, we try to think of what we receive? and why do we accept?
What we receive is money (cash) of Rp 5,000,000, -
Then find the money, including part of what is among the five elements of the above accounting
By using the accounting definition of the five elements above, we can conclude that money is part of the Assets or Property.
After that we must know why we receive the money?
The answer is: We accept cash, because we have been providing services so that we earn, By using the accounting definition of the five elements above, we can conclude that the income in these transactions are entered into the element of income.
In the example above transaction, we can state that "Assets" has the addition of money, on the other hand "Income" also increased because there are services we provide.
Once we know the elements of its accounting Now we try to specify the Debit and Credit for the above transaction.
In the transaction above, we already know there are two elements involved are the assets and revenues, of the two elements we try to determine where the debit and credit which ones?
In this note I will determine to debit is ASSET, thus recorded as a credit is REVENUES
Based on the transaction we can conclude as follows:
o Asset grow and grow revenue
o If assets grow then it will be noted on the DEBIT
o If the revenue increases it will be noted on the CREDIT
With the conclusion above, from now on if you want to learn the concept of debits and credits in accounting, try to instill in us that if the Assets Grow it will be noted on the debit and if the decrease will be noted on the credit. For income; if Revenue Increase will be recorded on the credit and when less will be recorded on the debit.
b. Example 2: Suppose we want to buy a vehicle valued at Rp 100,000,000, -, on credit.
Of these transactions can we imagine what we receive? and by what means we receive?
What we receive is the vehicle, and based on the five elements of accounting above we can conclude that the vehicle is part of the Asset
To have the vehicle we buy on credit, this means that we have a debt to be paid. Debt in the five elements of accounting above the entrance in groups of Liability
In this transaction example, we can state that "Assets" has the addition of a vehicle, on the other "obligations" are also increasing because there are debts to be paid as a result of vehicle loans.
Once we know the elements of its accounting Now we try to specify the Debit and Credit for the above transaction.
In the transaction above, we already know there are two elements involved are Assets and Liabilities, of the two elements we try to determine where the debit and credit which ones?
As specified in Example 1 above, that ASSET will be noted if the increase in the DEBIT, thus we must agree that if the increase should LIABILITIES noted adjacent CREDIT
For these transactions we can conclude as follows:
o Assets and Liabilities increases increases
o If assets grow then it will be noted on the DEBIT
o If the obligation to grow it will be noted on the CREDIT
With the conclusion of the above; from now when we've mengetahuai Increased liability will be recorded on the credit and when less will be recorded on the debit.
c. Example 3: for example, we will open a business in the field of computer rental, capital which we have just a single computer unit for Rp 10.000.000, -
Of these transactions can we imagine what we have to open the computer rental business?
Here can we explain that we have to run a computer rental business is a computer and accounting based on the five elements above we can conclude that the computer is part of the Asset
As already stated above that the computer used for business is owned by someone who opened the business, in other words the computer is in the form of capital
In this transaction example, we can state that "Assets" has the addition of a computer, on the other hand "Capital" also increased due to additional capital from the owner of a computer.
Once we know the elements of its accounting Now we try to specify the Debit and Credit for the above transaction.
In the transaction above, we already know there are two elements involved are Asset and Capital, from the two elements we try to determine where the debit and credit which ones?
As specified in Example 1 and Example 2 above, that ASSET will be noted if the increase in the DEBIT, thus we must agree that if the increase should be in CAPITAL next record CREDIT
For these transactions we can conclude as follows:
o Capital Asset grow and grow
o If the assets are increased then it will be noted on the DEBIT
o If the capital increase will be recorded on the CREDIT
With the conclusion above, from now on we've mengetahuai if the Capital Increase will be recorded on the credit and when less will be recorded on the debit.
d. Example 4: for example, to go to work we need the fare for public transport, say of Rp 5,000, - per day
From this transaction we can conclude that to go to work we need to spend money on public transport fare of Rp 5,000, - this means if we use public transport then there is the additional burden / costs
In relation to any charges / fees should we spend on public transport, then there is cash / money should be spent Rp 5,000, -
From this transaction can we stated that the expenses / costs would increase by Rp 5.000, - as a result of the use of public transport services, on the other hand cash / money would be reduced by Rp 5.000, - which is used for payment of public transport services
Expenses / Cost of public transport services into groups of expenses / costs, while cash / money into asset groups
Once we know the elements of its accounting Now we try to specify the Debit and Credit for the above transaction.
In the transaction above, we already know there are two elements involved are Assets and Expenses / Cost, of the two elements we try to determine where the debit and credit which ones?
As is well known in example 1, example 2 and example 3 above, that if the reduced ASSET will be noted on the CREDIT, thus we must agree that EXPENSE / COST if the increase should be noted on the DEBIT
For these transactions we can conclude as follows:
o Asset reduced and expenses / costs increase
o If the asset is reduced it will be noted on the CREDIT
o If the Load / Fee increases will be recorded next DEBIT
With the conclusion above, from now on we've mengetahuai when the Load / Fee Increase will be recorded on the DEBIT and if reduced will be noted on the CREDIT.
Of the four examples above accounting transactions can be concluded generally as follows:
- ASSET if the increase will be recorded on the debit and if the decrease will be noted on the credit
- REVENUES if the increase will be recorded on the Credit and if it decreases will be recorded on the Debit
- LIABILITIES if the increase will be noted on the Credits and if reduced will be recorded on the Debit
- CAPITAL if the increase will be recorded on the Credit and if it decreases will be recorded on the Debit
- CHARGES / FEES when increases will be recorded on the Debit dasn if reduced will be recorded on the Cr
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