somebody please simplify debit/credits go where, do not get it and going madder by the day

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
please help. Debits credits, control accounts, ledgers,aarrgghhhhhh.
I am totally stuck here and i will fail the exam if I cannot get it into my thick head

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:somebody please simplify debit/credits go where, do not get it and going madder by the day

    http://forums.aat.org.uk/forums/posts/list/15487.page
  • System
    System Posts: 100,534 🤖 Admin 🤖
    somebody please simplify debit/credits go where, do not get it and going madder by the day
    marclaire wrote:
    i will fail the exam if I cannot get it into my thick head

    Firstly, everyone struggles with Drs and Crs when they first start, so its only normal.

    Debit = Expense
    Credit = Income

    When I first started I would always start with the bank entry. So if you are receiving money from a debtor. It would be Dr Bank / Cr Debtors control account, therefore reducing the balance of the debt.

    The Debtors control account (or sales ledger control a/c) is an overview, of the sales ledger. In other words, it is a collection of the separate sales accounts, to show one total figure for Debtors. So when money comes in to the business from a debtor, that figure obviously needs to be reduced.

    Does this make sense?

    If you require any further examples (or more detail) pm me or email on

    paulsymes46@hotmail.com

    Paul.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:somebody please simplify debit/credits go where, do not get it and going madder by the day

    You might have been told that CR is out or -, DR is IN or +. The way I think of it is like a shop. Sales go out the door-literally so are out, -, CR. Purchases come in to the business, so are, in +, DR.
    If you know these then you can work the rest out.
    The one that might stump you are Loan payable which is CR, any payment made will REDUCE the loan so goes on the DR side.

    With opening balances, when posting to the accounts, if it is Credit suppliers they're Creditors and hence go on the Credit side. Credit customers are Debtors (owe you money) and they're opening balance goes on to the DR side.

    Hope this helps- I didn't get it till last week. I 've done all the past papers and I start each one by circling the figure to be moved and writing where they will go-makes it much easier.
    Mel
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:somebody please simplify debit/credits go where, do not get it and going madder by the day

    Dont worry, just remember that sales subsidary is always debit and purchase subsidary is always credit. When it comes to doing trial balance, its not that hard just keep calm and you will do fine. Will give you a list to help you out;

    Sales Account Credit
    Purchase Acc Debit
    Sales Ledger Control Debit
    Purchase Ledger Cont Credit

    Any expenses to the business will always be a debit entry (i.e. telephone, rent,)

    Dont forget that fixed assets are a debit entry and that your capital account is a credit.

    Are you sitting your exam tomorrow like me, if so good luck and I know you will do fine. :)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:somebody please simplify debit/credits go where, do not get it and going madder by the day

    Please also refer to my "Debit the debtors and credit the creditors" post found under the hyperlink below;

    http://forums.aat.org.uk/forums/posts/list/15646.page

    Robert

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