On 10/20/2023 11:47 AM, Edwin Booth wrote:
Thank you Michael. The ancient history of these terms is really
interesting. I don’t really “get it” yet but I see the idea here. Very
hard to set aside the use of credit and debit in the modern sense and
use them in a very different way. Counter intuitive.
Not exactly. The confusion over "modern sense" is something else. Thus
when R. Losey says:
"It*IS* hard because the accounting use of debit/credit is different from
the common or colloquial usage of the words. In everyday usage, people tend
to use "debit" as a synonym for "decrease" and "credit" to mean "increase",
and that is NOT the case in accounting, as the tutorials helpfully explain."
.... No, the confusion is NOT because accounting use is different but
confusion over whose books are you looking at. We are sued to seeing
these "in reverse" on statements we from from the bank for our bank
accounts or credit card accounts because on those it is from THEIR point
of view, not ours.
If you owe me, that is an asset/debit in my books and a liability/credit
in your books.
If you have money in a bank account that amount would be a debit from
your point of view and a credit from the bank's point of view (they owe
you the money, you are trusting them to give you that money when you
want to take some out). It is going to be the same when a business sends
you an invoice/statement. THAT is where the "in reverse" comes from.
Everybody is using the same accounting rules. Nobody is using these
terms in reverse. The point of view is what is in reverse.
Does that help?
Michael D Novack
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