Expert: Ed McFarland - 1/24/2006

Question
Am retired, not working, but may get into business a little. Have no business experience, so I'm auditing beginning accounting class. Text says "...a debit may be either an increase or a decrease, depending on the account affected. Likewise, a credit may be an increase or a decrease, depending on the account." Everyone acts like just memorize: increase (+) or decrease (-). My memories poor, and I like to see logic so I can figure it out if need be. Can you tell me the logic of +/- & debit/credit in accounts for financial statement? Computers rule, but seems these are basics one should know. Many thanks.

Answer
Charles,

Take it out of the abstract and apply to your daily living. You go to work and get paid and it goes into checking account. That's a debit to your cash and a credit to the employer's checking.

Off you go to the supermarket, you buy some groceries, credit to your cash and debit to your household inventory, Food Assets.

Accounting is simply if there is a positive in one place there has to be a counterbalancing negative somewhere else.

Never mind the financial statements, it will be easier for you to see it in daily living.

Try it out.

Good luck