Confused

So in a normal T account I’ve been taught that debit goes in and credit goes out. But when I’m researching the trial balance it is showing it as the exact opposite. Could someone please explain this to me? x

Comments

  • PeterC
    PeterC Registered, Tutor Posts: 226
    When you say that a debit goes in, I presume you mean that putting £2,000 in the bank looks like this:

    Bank account
    DR CR
    2,000

    So the Bank a/c now has a debit balance of £2,000

    Unlike T-accounts, the trial balance does not show transactions, it just shows balances.
    In the trial balance, the £2,000 debit against bank just tells us that the Bank a/c now has a debit balance of £2,000

    I hope this is of some assistance
  • PeterC
    PeterC Registered, Tutor Posts: 226
    This might be a bit clearer:

    Bank account
    ...DR....... CR......
    2,000
  • mybuddy
    mybuddy Registered Posts: 3
    Hi Katipie, " debit goes in and credit goes out " is half the truth . Please find below the full principle:
    For Personal Accounts - Debit the Receiver, Credit the Giver
    For Real Accounts - Debit goes in and credit goes out
    For Nominal Accounts - Debit all expenses and losses, credit all income and gains

    Let's Refer to the Trial Balance:

    Item No 1 - Purchases : Its an expense , so Nominal Account . For Nominal Accounts, the rule is debit all expenses, hence purchases have debit balance.
    Item No 2 - Sales : Its an income , so Nominal Account . For Nominal Accounts, the rule is credit all incomes, hence sales have credit balance.
    .
    .
    .
    & so on....

    Hope this clarifies :)
  • crispy
    crispy Trusted Regular SouthamptonRegistered Posts: 456
    Hi,

    When I was first learning bookkeeping I was told to remember 'DICO' ie: Debits In, Credits Out - what this means are that items coming in to the business are Debits (Expenses, Assets) whereas items going out are Credits (Sales, Liabilities, Capital). This is confirmed by the balances on your trial balance.
  • Clintm15
    Clintm15 Well-Known FarehamRegistered Posts: 247
    I've never though of it in terms of 'debit=in' and 'credit=out'. Simply for the reason that in a double entry system there are always 2 entries. Nothing can ever really 'go out' without going into somewhere else. It's closer to weighing scales in my mind.

    I found that it's easier just to focus on where things need to be debited or credited. I used the PEARLS rule when I started but I hear that's outdated now. Apparently DEAD CLIC is the way forward if you want to understand the nature of debits and credits.
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