Help needed!

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:24AM in AAT student discussion
I am doing the June exam on the foundation level and i am really starting to panic now. I can not get my head around the debit and credit, i always get them mixed up!

Can anyone give me any tips for getting it straight in my head?

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Help needed!

    Hi Kirsty.

    "PEARLS" is a good way of remembering. Where Purchases, Expenses & Assets are Debits, and Revenue, Liability & Sales are Credits.

    Debit Drawings
    Credit Capital

    Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Help needed!

    I've heard people say debits and credits aren't really logical, so the best thing to do is memorize them!

    Try: PEARLS & DEADCLIC

    Purchases = debit
    Expenses = debit
    Assets = debit
    Revenue = credit
    Liabilities = credit
    Sales = credit

    DEBIT
    Expenses
    Assets
    Drawings
    CREDIT
    Liabilities
    Income
    Capital

    I hope this helps

    Gem x
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Help needed!

    Hi, Our tutor always used to refer to it as goods going in and out of a warehouse:
    Sales: The goods are leaving our warehouse (as we are selling them funnily enough) therefore are credits, going out to the right, in the subsidary sales ledger the goods are going into the customers warehouse and coming in from the left into the debit side.
    Purchases are just the oposite way round, we are buying stuff so it comes into the debit side of the purchase account and is going out of the suppliers warehouse so goes out from the right (Credit) side of the purchase ledger.
    The control accounts are just summary accounts for the subsidary ledgers so its on the same side as in the individual accounts.
    Again with the cash books its money out on the right and money in on the left.
    For the main ledger accounts I tend to think of it as costing the business money, if its a cost or what the business owns its a debit, if its what the business will eventually pay to someone else its a credit.
    The one I always have trouble with is the discount - if its allowed its what you are allowing others to have and is a cost to your business as you are deducting off the cost therefore making it a debit
    Hope you can make sense of this - its a bit of a basic (well childish actually) way to remember it all but its working for me!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Help needed!

    My college tutor has always taught us the ACED CLI concept.
    This being

    DR
    A (asset)
    C (cost)
    E (expense)
    D (drawings)

    Cr
    C (capital)
    L (liability)
    I (income)

    hope this helps at least one person
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Help needed!

    it was all a jumbled mess untill my tutor said to me at last moment CIL and DEA (pronounced kill and dear)

    CREDIT = INCOME & LIABILITIES C.I.L

    DEBIT = ASSETS & EXPENSES D.E.A

    hope the penny drops as it did for me. if someone said that earlier id have slept more!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Help needed!

    ps if you struggle to decide if something is an asset or an expense/ income or liability , imagine how it would affect the bank account. would it go in or out then enter the opposite way up to accounts.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Help needed!

    Ooh I like that one :)

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