Accounting Jargon
Accounting
terminology is plentiful and confusing, I will try to minimize its use.
However, there will be times when it will be of
value for you to pick up and learn a new term. Just
as when you visit a foreign country, learning a few
key phrases will help your trip go smoothly and can
help you communicate with the natives!
Debits and Credits
When
you read a map, you talk about north, south, east,
and west. When you read accounting, you talk about
debits and credits.
Debits
and credits are the fundamental directional
markers in accounting, and both terms will be
used often here.
Before
proceeding, however, one rather confusing
concept must be explained. The only other place
you are likely to see debits and credits is on
your bank statements. In bank terminology, when
money goes into your account, it's a credit;
when it comes out, it's a debit. In the world of
accounting, the debits and credits relating to
your bank account are the opposite. When you
account for an outflow from your bank account,
you will credit the balance. When you have an
inflow, you debit it. Once you've worked with
bank statements and bookkeeping for a while,
this concept won't seem so strange.
Accounting
Jargon - Debits and Credits
