DEBITS AND CREDITS PROBLEM.

System

Hi All

I have been doing AAt foundation level since Sept last year, and i didnt know there was a helpful forum.

Most of all, ive come here for your help.
I have my exam in just over a weeks time, i have been revising constantly, but i really cant get my head around where debits and credits go for both sales and purchases.!!
I did really well in all my lessons, and now i have come to past papers, its like OMG!!!!! I check my answers, and they are on the opposite sides to what i have got. and i really cant see why they should be on the side the answers are. Hope you understand what im trying to explain.....

anyway....is there a "nak" on how to remeber these DR and CR's? If so i would be extremly grateful if you could let me know.
I know the PEARLS purchases, expense, asset, revenue liability and sales, but that doesnt always work for me.

PLEASE HELP....student in need.....I cant do intermediate if i cant grasp how to do this.

All replies much appreciated.!!!

Jackie

System

Re:DEBITS AND CREDITS PROBLEM.

Have you tried DEADCLIC?

DEBIT
Expenses
Assets
Drawings
CREDIT
Liabilities
Income
Capital


I hope this helps!

Gem

System

DEBITS AND CREDITS PROBLEM.

jackiepowell wrote:

Hi All

I have been doing AAt foundation level since Sept last year, and i didnt know there was a helpful forum. Welcome, our tutor only told us about the forums last week. But I came across it at the start of the course so I think I was lucky

Most of all, ive come here for your help.
I have my exam in just over a weeks time, i have been revising constantly, but i really cant get my head around where debits and credits go for both sales and purchases.!!
I did really well in all my lessons, and now i have come to past papers, its like OMG!!!!! I check my answers, and they are on the opposite sides to what i have got. and i really cant see why they should be on the side the answers are. Hope you understand what im trying to explain.....

anyway....is there a "nak" on how to remeber these DR and CR's? If so i would be extremly grateful if you could let me know.
I know the PEARLS purchases, expense, asset, revenue liability and sales, but that doesnt always work for me.

PLEASE HELP....student in need.....I cant do intermediate if i cant grasp how to do this.

All replies much appreciated.!!!

Jackie

Your not alone. I have been doing the past papers. I'm ok when it starts with a puchase question. When its the sales one for some reason I get them on the wrong side. I think what makes me do it is the wording the AAT use at the beginning of the question 'credit sales' so i put it on credit. Then I realise when checkng my answers that credit sales = debtors because they owe the company money. I am aiming to do a past paper every day until the exam.

System

Re:DEBITS AND CREDITS PROBLEM.

(Copied and pasted from a previous post with a little expansion)

Okay... let's start by remembering this which will come in useful later;

Debtors are our customers
Creditors are our suppliers

Say we make a sale on credit of £100 + £17.50 VAT. We would debit the sales ledger control (debtor) account (plus the relevant subsidiary account) with £117.50. We debit the debtor. The double entry to this is credit sales account with £100 plus credit VAT account with £17.50.

When we receive the customer's payment, we will credit the sales ledger control account (plus the relevant subsidiary account) with £117.50 and debit either the Cash Received Book (CRB) or the bank account with £117.50.

When we make a purchase on credit of £100 + £17.50 VAT, we would credit the purchase ledger control (creditor) account (plus the relevant subsidiary account) with £117.50. We credit the creditor. The double entry to this is debit purchases account with £100 plus debit VAT account with £17.50.

When we make the supplier's payment, we will debit the purchase ledger control account (plus the relevant subsidiary account) with £117.50 and credit either the Cash Paid Book (CPB) or the bank account with £117.50.

You will notice from the above examples that both of the control accounts - sales and purchases - will "tee off" and have zero balances. The VAT account will also "tee off" with a zero balance. However, note that the sales and purchases accounts should only ever have credit and debit balances respectively in them.

Remember for sales & purchase ledger control accounts, when recording the primary entries we should "debit the debtors and credit the creditors"...

Hope this helps a little.

(The links below go to the old Forum location, but they still work and the information still relevant).

http://www.aat.org.uk/forums/posts/list/13166.page

http://www.aat.org.uk/forums/posts/list/13224.page

Regards,

Robert

System

Re:DEBITS AND CREDITS PROBLEM.

I was told to skip foundation go straight to intermediate. Have stuggled with plca and slca entries the rest was okay but just in time for exam and after reading your posting it has clicked. Thanks.

System

Re:DEBITS AND CREDITS PROBLEM.

Just remember that when you think of "Pearls", think this way..

If P=purchases then purchases is always a debit but subsidiary purchases is always a credit (as is the purchase control account)....subsidairy and control accounts are always on the same side.

Same for Sales....sales is always a Credit, making subsidiary sales and sales control a debit.

When it comes to trial balance, remember this.

Purchases - debit ...purchase control is the opposite.(credit)
Sales is a credit....sales control is the opposite.(debit)
The "e" in pearls is expenses = this is always a debit whether it is in the relevant expense account and also the trial balance.

If you can't remember what goes where in the trial balance, just revert back to the account itself to see which side the balance is.