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Debits and Credits in Accounting Basics - Double Entry Accounting (DEAD CLIC) - Bookkeeping Basics
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- čas přidán 25. 07. 2024
- What are Debits and Credits in accounting. We explore the basics of #accounting and double entry bookkeeping in this video explaining the fundamental accounting concepts.
We will also use the DEAD CLIC method to explain these concepts further and provide examples to help you understand how it works in practice. Whether you're new to accounting or just need a refresher, this video is perfect for anyone looking to learn more about double entry accounting and how it is applied in real-world scenarios.
By the end of this video, you'll have a solid understanding of the concepts of #debitandcredit and how to apply them in your own accounting processes.
So if you're looking to enhance your knowledge of accounting basics, be sure to watch this video and subscribe to our channel for more informative content on accounting and #finance
Thank you so much for this! I have learned much more in 9 minutes than I would have in my lessons. I kept getting muddled up but the way you present and lay out everything with arrows is so helpful! I cant thank you enough!! Please make moree
I'm glad you liked it & understood it well! Thank you for the support and indeed i will be making more very soon hopefully 🙂
@@accountantexplains I'm confused on this. Debit = an entry recording a sum owed and Credit = an entry recording a sum received. Right?
if liability takes money out of your account, how can it be a credit? Why does a decrease in liability count as a debit but an increase in liability is a credit to your business?
Why do you only have 1.7k Subscribers this video is a lifesaver your DEAD CLIC is extremely useful brother much appreciated I hope you reach 1 Million subscribers soon and become the best accounting channel on CZcams 🙏
I am glad the concept has become more clear to you with the help of this video, really appreciate your kind words!
Your explanation is so understandable it made me not regretting choosing accounting
Thank you! i'm glad this helped you
Just wanted to say that I have watched so so many videos trying to wrap my head around double entry and this is the best one by far! Thank you so much for making this video, you have stopped me from giving up lol
I’m glad to know this helped you crack the code, it all links back to debits and credits believe me! Thank you for the feedback!
Very interesting, have learnt alot, I'm preparing for accounting job, this will take me a long way, please sir, more videos 🙏🙏🙏
'Accountant Explains ' host _____The Man______The Myth_______The Legend !!
You’re too kind!
I have 3 textbooks in front of me and none NONE of them made it this simple when processing in my head, THANK YOU !!!
Thank you for the support & appreciation! Happy this has helped you. Will try and upload more similar content soon.
Yes! Thank you for this! I'm in a speed course through my college with Accounting 1 and the talk about double entry but I was not grasping it or their examples. This helped so much!
I'm glad this helped you! Yes once you understand the double entry system accounting becomes a lot easier there onwards. I've not been able to upload much recently but will become active soon again & hope other uploads are also as useful as this one 🙂
Wow I just watched four videos this is the first one that actually explained it. Thank you so much!
Thank you! glad that this helped you 🙂
This is the first youtube video I finally begin to understand double entry accounting. Thank you!
Great! Thanks for the comment, I’m happy this has helped you
Good notes from a genius man.Thank you!
Thank you for the appreciation!
I too thank you for the simple style and enjoyable explanations, like Naima said, it was well worth it, a very good (9 1/2 minute debit) on my journal!!
thank you for the feedback! and it shows you clearly understood the concepts of debits and credits😉
Thank you so much - I was struggling to grasp the credit/debit types on my accounting course and this has really helped break it down in an easy to understand way.
Thank you for the kind words! I'm happy that this helped you 🙂
I am in the 2nd yaer of my studies and I just couldn't get my head around this! Using your video and my text book I now get it! Thank you sooooo much!
Thank you for the feedback! I'm happy this has helped you understand this concept.
As a person who started a channel recently, I really appreciate this thank you
Thank you for your kind words!
Great Video. Clearer than textbooks!
Thank you! Glad you liked it
Really clear and well spoken in the video, great job!
Thank you, i'm glad you liked it and understood the content 🙂
Great video, thank you very much! very simple and easy to understand!
thank you for the feedback!
Thank you for this! Very helpful.
Thank you! I'm glad you found this useful
This video was veryyyyyy helpful
Thank you very much! Glad you liked it :)
Thank you so much
thank you very much! debit and credit very well explained. otherwise people generally thinks debit means decrease and credit means increase. it all depends on type of transactions.
Thank you for the comment!
Thank you so much! Finally this double entry things makes sense to me :')
I'm glad this helped you, thank you!
very helpful, thanks
I am someone with no background in accounting, yet I was able to get it. Your mnemonic is so good. Thank you.
Happy to help! Thanks for the feedback
Very good video
Thank you! Well presented, it now makes a lot more sense watching this along with my text books! 😁
Thank you for watching & i'm happy to hear this has helped you!
This helped me a lot 👏👏👏
thank you! glad to hear this
I really like how you explain all the transaction types and debits and credits in a very understandable way.
Thank you! Im glad this has been helpful for you.
Thank you so much! I just couldn't get my head around this concept and this has huuugely helped
Glad to know this helped you!
Thanks for this great video. It was really very useful for my learning. Gave me a better grab of the debit vs credit double entry struggles have been having. I appreciate. Felix
thank you for watching! & i'm happy to hear this helped you understand Debits & Credits
Thank you for this video. It helped me very much to understand the double entry book keeping.
I’m glad this has helped you🙂
Perfect Explanation, thank you so much, it made my class. Your explaining technique is superb!
Thank you so much for the comment! Glad this helped you🙂
Thank you so much, keep the good job. Your explanation was fabulous
Thank you for the appreciation!
Thank You Very Much for the soft Example it helped me a lot to learn.
Thank you for watching! Glad this helped you🙂
Thank you so much.i understood everything you told and i liked subscribed commented and shared to everyone in my class :)
Thank you for the support, helps alot!
Your method is ingenious and very appealing. I learned a lot. There are a few terms that are thrown around by others. Isn't a credit essentially a minus? I mean I look at credits with the minus figure in front of the credit figure. Another aspect that would make accounting easier to comprehend is using the full term of a concept. Take for example the word expense as an account. It is actually an expense ledger, is it not? I mean, are these just all different ledgers? Expense ledger, rent ledger, cash ledger, etc. That makes the concept easier to comprehend. So instead of saying the expense is a debit and the cash account is a credit. It seems clearer to say the expense ledger is debited (and increases) and the cash ledger is credited (and decreases, which also decreases the bank account). Also, each transaction must have a double entry. There is a skill to learn. But there are always two entries.
Thank you so much this has been so much help🙏🙏🙏
Thank you for the appreciation! Will try and produce more educational content soon.
Thanks a ton!
You're welcome!
yes thank you
ive learnt a lot
Great! Happy to help🙂
Thank u so much for your clear explanation. I wish I could see more examples of debit and credit and how they sit in double entry
Thank you for the feedback, will definitely try and make more content soon & will include some more examples of debits & credits.
Thank you so much for this
You're welcome!
Great video thanks a lot 👍👍👍
I'm glad this helped, thank you for the feedback!
Thank you so very much
No, thank you for leaving the supportive comments!
Extremely useful! Thanks man you should take my lecturers job cause they don’t know wtf is cutting
very well explained..cheers
Thank you!
Thank you a lot! You made my day bro, honestly. Спасибо Огромное! Katta Rahmat oka atdushe)
i'm glad you have got some benefit from this video, thank you for the feedback!
Wonderful detailed video
Thank you!
Omg this helped so much!!
Im glad to hear this helped you! Thank you for watching🙂
Very helpful 🎉 thanks
Thank you!
👍
I understood very well about debit and credit sir thank you but i request you to make lot of videos about financial accounting and all the concepts of accounting and also final accounts sir 🎉😊
I have not been active lately I accept that but I’m definitely working on getting back in the routine to making new content regularly soon. Thank you for the feedback, i’m glad you liked it!
DEALER is also good example
👋 Hi. Ive just started CIMA and struggling a little. In one of my scenarios there is a sale of £2000 of stock for £3500 and im being taught that £1500 is an increase in capital. Why would this be if capital is not income please? Is it only profits that are capital? Thanks so much
Hey there, than you for your comment. There maybe something missing in your understanding of the scenario. Capital section of the balance sheet is made up of mainly the following two items (ledgers)
1. Share capital (this would be the actual share capital issued when the company was setup along with share premium and then any subsequent shares issued, the money value will go to these accounts, hence capital of the balance sheet can increase/decrease if any movements in the shares issued of a company. Generally for SME's this doesn't happen much often so for the majority of companies you can expect this to remain the same year on year in the balance sheet.
2. Retained earnings - this also forms part of the capital section of the balance sheet and is the profit (or loss, in which case it will decrease the retained earnings) for the period of the company.
Now in your case, with what you have mentioned, it seems you sold stock at a profit of £1,500 which overall the £3500 is your Income and then then you have cost of sales/overheads against it (if any), then the net figure becomes your profit or loss, which at the period end is transferred over to the profit and loss.
Lets say for your statement to be valid, we will have to thing you have no further expenses and you end up with a pure profit of £1500 so if you extract the balance sheet at any given time (does not have to be a period end) the net result of all the P&L ledger accounts in your trial balance form your current year retained earnings. So if the net profit from selling your stock was £1500 and no further adjustments then yes that £1500 will still be part of your 'Income' in your P&L as part of the £3500 you received in sale proceeds. But if you were to extract the balance sheet on that same day, that profit you made of £1500 from that stock will be part of the retained earnings (which is the capital account) in your balance sheet.
I hope i am not confusing you anymore, but in short you have to look at it in a few different steps, the 1st journal entries you will make for the sale of stock would be the usual ones, Cr Income (total money) and Dr Bank. You would already have done your initial stock journal when you bought the stock (Dr Purchases Cr Bank) etc. so in your case i think what you might be referring to is that, the £1500 profit you did make will eventually end up in the retained earnings (capital) if you were to show the balance sheet on that day when the sale was made.
Another way to think is that the £1500 does end up in the capital (Retained earnings) but that's not where the first journal is posted to, you don't post any journals to the retained earnings, the net figure from your P&L goes to your retained earnings automatically at period end or if you extract the balance sheet at any given date.
Hope i helped you even a tiny bit but i understand accounting initially seems very confusing but once you start linking the figures and the relation between P&L and balance sheet accounts it starts to make sense.
Good Luck with your CIMA exams!
Amazing!!!
Thank you 🙂
@@accountantexplains please make more videos like this as I’m currently doing a level accounting’s and this actually helps a lot
@@jamalmughal8869 Will do! I haven't uploaded anything for a long time due to work commitment but will start again very soon🙂
THANK YOU !!!! ALL I GOTTA SAY
No, thank you! All I gotta say!
You gotta new subscriber
Thank you so much 🙂
Nice and easy
Thank you!
Hello, this was helpful in many ways. But I do have a doubt about the layout of the double entry accounts.
I saw elsewhere that, If let's say the Expenses Increase, we put it in Debit, correct? But in the details section of the layout, aren't we supposed to write credit?
I think you are confusing this with the layout of a T account.
Within the description on the T account you would normally write where the other side of the journal is posted.
The concept remains the same, if expense increase its a Debit, if they decrease its a Credit.
Understand each type of transaction and decided if it increased or decreased then either Debit or Credit it.
Hope that helps!
Hi, may I ask ask which accounting qualification you sat? This has been really useful !
Hello, i'm glad you liked my content. I'm an ACCA qualified accountant 😀
I'm going to try and start making regular content in the next few weeks as not been active for over a year now😅
I need more videos sir.
Thank you! I am trying to get back into the routine of producing more content hopefully very soon.
Excellent video. Great, simple breakdown. Much appreciated.
One thing though... If you think money in the bank is an asset and NOT a liability, your financial foundations and understanding is dangerously skewed.
Thanks for the comment.
Although I didn’t quite understand the second part of it.
This is a video on what the entries are for various accounts within double entry accounting concepts. And i don’t see how you are saying cash going into a bank account is a Credit entry? Whenever cash goes in the bank it will be a debit entry (increases your asset) 100% all the time, its never a credit entry.
Is that what your saying? I would love to know how thats possible
But if your referring to lets say you get cash in the bank account as a loan and that is what you call a LIABILITY then again your wrong in the theme of this video. Even in that case your journal entries would be Debit bank and Credit loans - so in this case even though its a loan (liability) but for you to post that transaction into your ledger you would still need to say your asset (bank) has increased so it will be a debit and a liability (loan) has also increased so it will be a credit. That is double entry accounting, when an asset increases but creates a corresponding expense or liability.
Please do respond if i didn’t answer your concern properly and i’ll be happy to explain further!
@@accountantexplains "The Creature from Jekylle Island" by G. Edward Griffin
I’m confused so if cash goes down it’s a credit and if it’s value goes up it’s a debit?
Hi, Yes that's correct!. As Cash is an asset (including petty cash too) if it goes down in value it will be a Credit and if it goes up in value its a Debit. Do not confuse these Debits/Credits with what you see on a bank statement (they are opposite way round, as that's from the bank's perspective). Hope i've not just confused you more 😅
Great work, if you ever want to collaborate on some accounting courses let me know
Thank you, just watched a few of your videos too, great stuff! I've just not been able to create or upload anything for ages, but hopefully once i do would be awesome to work with you!
I can now work at the bank. why is it that our professors do not explain it this way.
If you have to add it to both sides it doesn't matter whether it's a debit or a credit.
Help! @ 3.37 the asset has gone up..... so it's a debit? ??? No now i don't understand- & i'm watching lots of videos to try but i still dont.
If the asset goes up in valueby nature it shouldbe a ....debit🥴
Hey there! do you mean @ 8.37 ? (because i don't mention asset at 3.37)?
If yes, at 8.37 we pay for rent £500 which means we are reducing our bank balance, bank being an asset and going 'down' in value will be a 'Credit' (if it was going up it would be a 'debit' as its a debit by nature) - so let's say if you received a refund from your electricity supplier for £100 that will be Dr bank 100 and Cr Electricity expense 100 - in this case your 'asset' (bank) increased in value.
Hope that makes a bit more sense?
@@accountantexplains Thank you so much for replying! I still don't get it yet. I guess I will have to just keep reading and going over it again and again until the penny drops.
Thank you again for your time!
@@springrain777 Hey there, i'm happy to help if you want to write you exact question here, i will be happy to reply in as much detail as you need.
As mentioned, first understand what type of account does the transaction belong to. Example if cash is going up or down that is an asset. If rent/other expenses go up or down they are all expenses.
so see what transaction type is going which way and then apply the Dr/Cr based on their nature. So an asset going up is a Debit, an expense going up is a Debit. An expenses going down in a Credit and an asset going down is a credit.
Let me know if you still need further explanations on this.
@@accountantexplains Wow thank you, that is so kind, I appreciate it. I will go over it and then come back to you, with a hopefully clear question😊
@@accountantexplains Thank you, again. So I have been going over, making notes and still trying to figure it out.
I understand why :- if the value of and expense or drawings increases it will be a debit. I (think) I also understand that if an asset such a as buying a computer it will be a debit (as you would have had to draw money out of the bank to pay for it- so it's a debit. But I don't understand why if your asset as in money increases (in the bank) it will be a debit? I think this is where I am really stuck.
So I guess my question is : why is cash asset a debit?
Hello Hasnain: i just want to add that any informative help I can get for FREE, any help towards my complete understanding of accounting principles, is like Earned Revenues on the sheet; my input is time, listening, viewing and absorbing a wealth of concise information, saving me hours of looking up and reading the same information you provide in a fun style manner. Yesterday i manageed to finalize my first Trial Sheet; the balance statement and the stockholders needs some improvement, but I know, I will get there!!, again thanks, you're good!!
that is very kind of you to say! means a lot & gives me motivation to try and upload more frequently. Best of luck with your learning!
I meant in all honesty what I said; it's amazing that in one moment you're all frustrated and literally agonizing, simply because you want to learn, to know something correctly, not just have someone or a paid service provide you the answers you're seeking. i took a chance and decided to cool off by viewing your video, see if I could actually learn; it was like a godsend, meant to be; the feeling was incredible, and my professor stated "Excellent job"; I have you to thank for that, thanks again!!!
Do you have anything on closing entries, It took me over a week to figure out exactly what it really is, but if I see and hear more on the subject, i'll get better.
I'm confused on this. Debit = an entry recording a sum owed and Credit = an entry recording a sum received. Right?
if liability takes money out of your account, how can it be a credit? Why does a decrease in liability count as a debit but an increase in liability is a credit to your business?
Who said credit means a sum received???
@@nirajthakor9748 Google.
Don’t look at it debit and credit as in and out of the bank (thats also the term banks use on their statements, a topic for another video)
Instead see it this way, if you receive money your bank has increased in value. Bank is an asset by nature, if that goes up in value its a debit. So in the case that bank goes down in value (i.e. money leaves your bank) the same bank will be a credit.
And to answer your other question, no Debit is not a sum owed or Credit is not sum received. I think you got this confused with how a bank statement shows money in and money out, that is looking at the cash movement from the banks perspective (this is another interesting topic i will make a video on as i see a few people get confused to see the bank statement showing money coming into the account as credit on their statement but here i say bank money comes in is a debit). I am explaining the double entry in which case it is a debit entry on your journal entry but the bank statement is from the bank’s point of view so for them to receive money its a credit for them as they will need to return it back whenever the customer (you) will withdraw it. As said its not easily explained within a comment so i will add this topic to the videos to do for sure!
@@accountantexplains Thanks sir..Btw i want to know too that on what basis they make entries? As you said that they do on their perspective but suppose i withdraw money from bank so they'll ofcourse debit my account but on what and even what do they credit??
@@accountantexplains Thanks, I appreciate the feedback. Do we know why certain things are debit by nature and why others are credit by nature? Or is this something accountants don't know or need to know?
Someone said it this way. All transactions are made from the standpoint of the bank. They said that the bank sees us putting money in as a debit. Although I think it makes more sense if we debit the money from the cash register and put it in the bank. I don't know credit is a bad word. It implies a credit score. Credit is something different from what you have. The cash register doesn't make sense because the credit to your cash register comes first. And the corresponding transaction is that goods have been debited from the business. Then the next transaction is from the cash register which now has a credit of 1000 and it's then debited from the cash register into the bank. Two transactions. A sale transaction and a bank transaction.
Oh okay so I'm just stupid because I still don't understand any of this.
I'm sure you'll understand it very soon! Just keep on practicing different basic double entry journals etc. and it will all make sense 🙂