Accounting 101 Part 06 Debits Credits

[adelle0001]

thank you so much!

[cynthia2cyga]

Thanks for the tutorial. You've cleared my confusion. Took this subject last year and passed but still not really got it. And btw i'm from Indonesia. Your tutorial gives worldwide effects :)

[enlight09]

good point!

stealing is a source of cash of course. but stealing is a job with costs that far exceed benefits for most of us. getting a job was mentioned; so stealing is technically encompassed by the video content.

not many of us are angels or saints; but most of us are not dumb.

i bet the average accounting grad earns about $2,000,000 in his or her career, while the average armed bank robbery nets about $2,500.

the surest way to screw up being a millionaire is to cheat or steal!

[SlyBlackNinja]

He didnt mention stealing in getting cash!

[prospectnyc]

To clarify, ADE's are increased with debits and LER's are increased with credits? Thanks!

[chandragini]

Hi

Found this tutorials very useful

Just confused with last bit of this video about E & ADE = Expenses and E & LER = Equity

[enlight09]

@chandragini Exactly Right!

[enlight09]

Respond to this video... Well, it is a tad confusing that E appears twice in ADE & LER. Your explanation shows them correctly!

[luisespa89]

I wish you were my Professor!! Thank you very much!!!

[trifio5242]

I have a question, I wonder if you could help me:

assets is what i have, liabilities is what i owe, therefore equity is my actual REAL worth, so that i can put my hand on it and say THATS MINE! so debits is when my assets increase ONLY. therefore i am richer. credits is when my liabilities increase ONLY, thus i become poorer, BUT HOW IF MY EQUITY INCREASES (I.E. I BECOME RICHER) WE CALL IT A CREDIT?

I am sure I am like 1000000th student asking that, but I honestly don't understand,help...

[enlight09]

@trifio5242

yeah -- we all struggle with that in early days. for weeks, i thought debits were "good" and credits were "bad." i think i got that because i liked debiting cash!

when assets die, we credit the assets and DEBIT expenses! we are poorer, for sure, when that happens.

point is, you will need to take this debit/credit thing on faith for a week or two.

once it clicks, you will never think twice about it again -- it is just the way the equations work.

good luck!

[trifio5242]

@enlight09 to be honest I think I found a solution to that problem. equity for a business is a liability!isn't it? i mean if the money from sales are in the bank account doing nothing, they are a dead weight to the company UNTIL the money is transferred into assets.I also remember thinking that a highly liquid business is not as profitable as low liquid business, thus if you have cash, i.e. liquid assets, you put it into the business (assets) make them less liquid and get a higher return on them

[thebackpackperson]

@trifio5242 Don't think of debits and credits as having to do with being richer and poorer. You're on the right track, and you're right about assets and liabilities as far as where they go. Equity follows the same rule as liabilities. If it goes up, it's a credit. If it goes down, it's a debit. Like i said, don't relate debits and credits to being richer and poorer, just memorize the rules, and roll with it. =)

[AIMANALI]

thx u r the best

[Ramadog]

hey enlight. God bless you for these videos. I think this debit and credits thing does not have to be memorized. I feel it is more or less intuitive from the equation. The Equation I was taught was

A+E(expenses) = L + C(capital) + R

The E is on the left hand side of the equation to turn it into a positive number to avoid confusion. Everything on the left is a debit and on the right is a credit as you said in the video.

[crazydhanz]

oh yesss

[zebbedi]

Ive loved all your videos so far, it has given me some clarity for and helped me bind ideas together much more efficiently. Great job!!

One slight issue that i have though is that i find your ADE, LER rule to be slightly less useful then the PEA, RLS rule that i was taught.

Purchases, Expenses, Assets- Revenue Liabilities , Sales i find a bit easier. I would love to hear your input on this.

[enlight09]

Thanks for kind words!

PEARLS is interesting, easy & new to me. If it works for you, stay with it!

As critique:

ADE & LER start with A = L + E, a key equation & include "Equity" as a separate element - missing from PEARLS.

It's tough to reconcile "Purchases" and "Expenses" to a new student - exactly how are they importantly different?

Finally, "Revenue" and "Sales" seem like synonyms - PEARL may be more succinct than PEARLS.

Accounting is robust! More than just one way to see things!

[zebbedi]

Im glad you asked. The 'Purchases' and 'Sales' parts only really help in the case of credit purchases or sales, hence credit 'Sales' debit 'Customer account' (or relevant control a/c). In this context 'Sales' has also been known to be called 'Source of funds' but as im sure you'll appreciate the whole point of these acronyms is to help people understand therefore whatever works for the person is best.

In summary, everything PEA is debited as it increases and all RLS credit as they increase.

[Mike21040]

very helpful thx

[learnanddeliver]

Thanks for the really simple way to remember this complicated stuff. I am taking accounting class for the first time, and it is very confusing still, but this equation has helped to me atleast confidently memorize this stuff.

[haseena92111]

extraordinary style for guide .with a low tune of voice that is excellent understand .Muhammad shaukat 0092-0300-7900-401

[zombiehellmonkey]

kinda boring but thanks all the same

[enlight09]

Well, it IS accounting!! Still . . . will see if we spice things up. Thanks for viewing, and good luck in your studies!

[AryanaLand]

i wish u were my teacher in class lol no i wouldnt be here.. and wouldnt fall asleep during my lecture :S

[honeychick4ever]

I like your way of teaching the course.

Great videos!