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Debit and Credit Translated from the German of Gustav Freytag
Gustav Freytag
2006
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In double entry bookkeeping, debits and credits (abbreviated Dr and Cr, respectively) are entries made in account ledgers to record changes in value resulting from business transactions. Generally speaking, the source for spending money in a transaction in the account is credit (that is, an entry is made on the right side of the account's ledger), and what the money obtained with the credit is described as a debit (that is, an entry is made on the left side). Credits could be share capital, revenues, etc., while debits could be assets, dividends, and so on. From a technical point of view, the sides refer to the balance sheet placement of accounts. Total debits must equal total credits for each transaction; individual transactions may require multiple debit and credit entries.
The difference between the total debits and total credits in a single account is the account's balance. If debits exceed credits, the account has a debit balance; if credits exceed debits, the account has a credit balance. For the company as a whole, the totals of debit balances and credit balances must be equal as shown in the trial balance report, otherwise an error has occurred.
Accountants use the trial balance to prepare financial statements.
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Keywords
- German fiction -- Translations into English
- GITenberg
- Mercantile system -- Germany -- Fiction
- PT
- Social classes -- Germany -- Fiction
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