Why Debits and Credits AREN'T Backwards
ฝัง
- เผยแพร่เมื่อ 7 มิ.ย. 2024
- 🆓Debits and Credits Free Quiz → accountingstuff.com/blog/debi...
💥Debits and Credits Cheat Sheet → accountingstuff.com/shop
🖊Debits and Credits Practice Questions → accountingstuff.com/practice-...
Accounting Basics Lesson 6. In this episode of Accounting Basics for Beginners, we answer the question - why do Debits and Credits on the Bank Statement seem backwards? Debits and Credits are confusing enough without throwing in the complication that they appear backwards in Accounting. When you Google "debits and credits the wrong way round banking", you'll see that there are 39 MILLION results. That's insane!
This episode of Accounting Stuff - Accounting Basics Lesson 6 - is a continuation of our series on Basic Accounting for Beginners and we aim to finally put this issue to bed. In this short video, you will learn:
▪ What phrases such as 'debited to your account' mean.
▪ Why are Debits and Credits backwards in Accounting.
▪ Why Credits and Debits AREN'T backwards.
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⏱️TIMESTAMPS
00:00 - Intro
00:38 - Why are Debits and Credits Backwards?
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#accounting #accountingbasics #accountingstuff
Hope you found this video useful. As always, please let me know if you have any suggestions for future videos?
🔗USEFUL LINKS
▪Debits and Credits Free Quiz → accountingstuff.com/blog/debits-credits-quiz
▪Debits and Credits Cheat Sheet → accountingstuff.com/shop/debits-credits-cheat-sheet
▪Debits and Credits Practice Questions → accountingstuff.com/practice-questions/debit-credit-question-pack-1
⏱TIMESTAMPS
00:00 - Intro
00:38 - Why are Debits and Credits Backwards?
Sir plz upload videos related to royalty accounts
Hey buddy, can you do a video on EBITDA?
Can you do a video on reversals?
Please do a series on stocks, EPS, etc!
Thank you for this video. This has ALWAYS mixed me up. I appreciate this explanation so much. I know from other videos you have made, you have fixed this issue, but the outside noise made it so hard to hear you. All my best!
I’m on a binge with your videos. Love them. I’m learning more from you than my mba program. Thanks so much!
Haha, hope you're not sick of me yet! Good luck with your MBA
James, Binging the basics while I'm doing a professional course. Haha
Had lots of confusion between debit and credit because of this banking thing !
Finally you are here ! 🙌
Thanks for your quality , crisp and to the point content !
Cheers ;)
So every time we swipe our DEBIT cards we are DEBITING their liability
Shut up
James you are doing a great job .. I like ur videos as it's short , precise & of course well explained.I wish you will become a top notch TH-camr in future 👍
Thanks Sanjay, that is kind of you to say!
First semester of Business Administration ends next week, this whole semester I always got confused b/w debit and credit in my accounting class because of this exact question being stuck on my mind for the entire semester. This video helped a ton!
P.S: Accounting Final tomorrow wish me luck :P
Good luck!!!
This definitely should have been an earlier video. I was asking this after the debits and credits video he previously did. Thank you for doing this videos!! 👏🏻
For anyone still in confusion, I hope this reminder helps!!
Remember in James second vid he mentioned credits and debits aren't thought of as adding or subtracting but as a source and destination so your asset, the reason it is going up through debit is that your account is the destination so when money is put in it, it goes up while with credit is the source so you may use your assets being cash for example as a source to send it to another account being the other destination. BOOOM WHAAAATT!!! - Had to play this and past videos multiple times to understand this, hope it makes sense! :) If its not entirely right you could just think of this being the asset side of the question XD
I didn't get one word that you said
@@mustafaaqil6775 lol
@@mustafaaqil6775 yea me either accounting is backwards just to confuse normal people and make us pay for an accountant. They never give a good reason for the backwards just more confusion. I am not the bank and should not have to think in the perspective of the bank. Makes no sense. May as well just say its backwards bc it is
So if debits decrease and credit increase what does it mean
Tx, I study accounting now and boy...this bloody small detail was short-circuiting my brain - getting the clarification on the POV from banks perspective cleared it all! Great stuff!
Glad to hear it's making sense! This confuses a lot of people
2:02 Concerning your banking example: I understand the bank POV, but not the customer POV. Why would debits increase the value of the customer account? Are the banks using incorrect terminology with the common people? Because banks refer to the addition of money to the customer account as "credits".
Thank you so much James .I've been an learning accounts since a year and seriously I had this doubt from the very beginning and today you just cleared it .please keep making these videos they are super helpful.
No worries, this used to confuse me too!
Noooo, I’m halfway through this playlist, top quality videos!
Thanks!
they say better late than never!!!! am an intern currently who signed for IT development where i work but i was pushed to accounting, in the words of my boss, 'we need an all rounder' and today is my final interview, this is such a life-saver. Thanks a lot James
Yes, THIS is exactly the question I want to ask always!
Hope you found the answer you were looking for!
You are such a genius, James. I love how you explain everything ❤️
Thanks for your kind words :)
Thank you very much for this explanation! It help a lot to clear my confusion!
short yet informative way to go!!
Thanks, glad you enjoyed it!
This is what I have been finding to be so confusing! Thank you for clarifying
No problem :)
I'm trying to switch from banking to accounting and this finally made it make sense
Very clear Bro... Good stuff...... lanjutkan...
I really like this outdoors filming location. It's very pretty, but it also mitigates some unpleasant sounds picked up on the mic in most of the previous videos in the playlist, as well as making the color palette a lot more lively rather than having the very bright lights in the eyes. I also like the editing showing physical locations, those are quite nice, like the ScotiaBank shot and a few other shots in the outdoors series so far.
Thank you! Exactly what I was looking for.
No problem :)
Thanks, man! This explanation cleared my confusion. Bless you. :)
No problem :)
Mind blown. 🤯 Thank you for the clarity. Love your vids. 😎🤟
Thanks Carolyn!
Nice ...great work
Thanks Zaid!
I am in Financial Accounting this semester and it ALL sounds like gibberish. I cannot wrap my head around the whole Debits/Credits things. My husband found your page on TH-cam for me and it has helped so much. I still am struggling but your explanations are MUCH better than the material I am given to read and the videos my professor chooses.
I felt the same back in the day. Keep on practicing and I'm sure it'll start to click for you. Best of luck!
Dude! Your videos have been so helpful for studying for my accounting final! (Also making me nostalgic for my Vancouver days) If you're ever in Victoria I owe you a beer!
Haha, thanks Liza! I was lucky enough to stay in Victoria for a week last summer. It's a beautiful spot over there. Would love to go back someday.
The past few days I have had the same confusion as to why in the banks it's another way. Now that I got that clear the learning path is more clear than ever.
This used to confuse me so much as well. Glad it's clicked for you!
I was so confused about this and you resolbed it in 2 minutes. Thanks
Great to hear it's making sense :)
Love the quality of the videos and the thinking process behind them ! It shows your dedication. Thank you for your service, sir !
Thanks! Great to hear you're finding these useful
Bro, thanks a bunch to say the least. God bless you.
love you~~~~~ Thanks a lot. You are much more helpful than my teacher.
Very cool and understandable. Thank yoy.
im studying accounting and have been stuck on this debit and credit thing for ages and no one has given a clearer explanation! the penny has finally dropped lol Thank you xxx
Great to hear it's clicking for you!
Thanks for making the video trustme It is very very useful for me 😍😘 just waiting for your next video James ❤
No problem! The next one is out Monday 🙂
Very useful mate
Cheers Adham!
Thanks James, from the UK
Dude you're awesome!
Finally. Thank you.
Really useful👍🏻
My accounting mentor!! Brilliant bro
Thanks mate!
Brilliant explanation! I teach Intro to Financial Accounting and my students ask this ALL the time. Instead of writing out my long-winded explanation - I now just give them the link to this video. Thanks :)
Hope your students are finding it helpful :)
Thank you James. So hard to twist my head around.
No problem :)
Thanks James ... Now I understand it is the perspective
Yes, that's the key!!
You are heaven sent James! And Hector Garcia as well, since I've come to know your channel thru his video. You both are golden! 😮😮😮
Hey James thanks for your videos and clarification. Have never entered an industry that is such confusing for a beginner. May I ask you to clear up one question I have. For instance in option trading when paying a premium this is called a debit transaction as I have to pay it out like a sunk cost. Does this banking point of view also apply here like a Brokerage Account point of view or rather its a debit for the counterparty like option writer. I have a big problem as I see always my account cash as an asset and need to think the other way around. Keep up your awesome work. Best from Barcelona
I love you and your content it's a God send!
Thanks Samantha!
perfect explaination !
Thanks!
I get that your bank account is a liability for the bank but I'm still confused about why debit and credit are the way round they are in general accounting because the words seem to mean the opposite etymology wise
Thankgod, now i finally now what are debits and credits!!
Grt stuff✌🏻
Thanks!
Awesome video ...
Thanks Kashmiri!
Ok, so this is helping me on my way to understand, thank you. But at 2.00mins you said from our (Customer's perspective) debits increase assets. Hmm .... How is that when you also say that our account is an asset but to the bank a liability? (if our account to us is an asset, then surely if the balance decreases (debit) how can it increase assets???
(Just started on an accounting course, well my son, and this got me stuck straight away! How confusing! Of course everyone is likely to think of their own bank statement and debits and credits in our accounts.
Wish the books explained it, but at least you have - THANK YOU!!!!! otherwise I'd have got NO further!
p.s. I think you are the only one who HAS explained it ??👍) Definitely gave you a thumbs up and sub'd
Mind blowing !
I won’t skip any ads to support ur video😂 love it 😍
Haha, I don't mind if you skip the ads! Thanks though
2:09
"It is all about perspective" 👍
Thank you!!
You're welcome :)
i love your humorous videos and especially those with beautiful Vancouver backdrop, and this one with a plane at the end ;) (commercial aviation enthusiast from n.z. :)
Cheers Nathanael! All the best
Thanks for the great teachings .
Its helping me deal with the Hm treasury ...
No problem, happy to help :)
Thank you James! You are amazing! I want to be your friend lol. I went to business school, hated accounting although I always grew up "great at math." It is math but it's a lot more than just that, the logic behind all the moving money didn't click very well. Fast forward a few years and now I work in financial accounting and analysis for a retail company. Watching your videos is like the best refresher but better than college. Your teaching style is great, your persona is so fun and engaging, you make everything so simple and concise. Thank you x 1 million.
Thanks for your kind words! Appreciate it :)
Really helpful. Planning to watch all of your videos XD
Hope you find them helpful!
@@AccountingStuff Yes. My notebook is filled with the information from your videos. Even copied the cannon's BS IS and Cashflow sample for my reference. :) Just finished the Direct and Indirect Method .
@@lalmirch200 Nice one! All the best with your studies :)
it's been really helpful...
Glad to hear it :)
Thanks a lot
Thank you
you're hella talented bro gj
You are too kind!
Keep it up, my friend is visiting your chanel more and more :3
You are freaking awesome.
Haha, thanks!
To brush up on needed life skills, I'm taking Intro to Accounting through Sophia.org. As another viewer said below, I'm learning more from watching your videos than in my course. This was one of the first questions I had and, you are the only person that answered it. The acronym D.E.A.L.E.R has helped immensely right along with your explanation of DR & CR. Thank you so much for teaching!
No worries Jennifer, this confused me too! Glad to hear that you're using self isolation time productively
Good video
Thanks!
this video changed my life
Thank you brother❤
You're welcome :)
Brother love your channel, make a video on Bill of Exchange!
Cheers for your request!
Thanks......
No Problem!
James, as ever awesome awesome video but please don't do any more sitting on a railing 200 ft above Vancouver because I spent the whole time worrying you were going to fall off!! 😨
Haha, never again I promise!
I took intro to accounting my freshman year at community college, and for whatever reason, never asked this question yet it continued lingering in my subconscious mind. I’m now entering my senior year of college, and I’m just refreshing my accounting knowledge to prepare me for when I start making more money and again this question continued to slap me in the face. That is until now, THANK YOU SO MUCH I can now sleep in peace lmao!
Haha, no worries I'm glad you can rest easy
Bruh I knew i wasnt crazy. When i first looked at a bank statement and tried to apply the debit and credit to it and my brain fried. Its really based on perspective.
Thank you for the it's explaining this was really helpful. Because I am in grad 8 and I was struggling with that in my ems so thanks 👍👍👌🧠💬🗨️👍👌🧠
You earned your "like" on this one
Thanks Lorna, you're too kind
Can you make a video explain how to calculate the cash book account
Hey Arwa, thanks for the suggestion!
Hi.When customer deposit their money into their checking account, from the bank pov, the credit increase, and the debit decrease. The credit here represents liabilities and my question is what does the debit here represents? Thanks!
Hey Andrew, from the Bank's POV the Debit would represent an increase in cash in their own bank account
That's because from the point of view of the bank, when we deposit cash on our account, the bank is supposed to give us back this cash whenever we need it, so cash is a liability from the bank's point of view
This is the biggest thing that screws my brain up, I've never thought about it this way!
I have this exact doubt which isn't letting me proceed in accounting, but I still cannot understand it. sigh
James, I have a question re the customer POV of their bank account. So if I debit (draw money out of) my bank account, how does this increase my asset? Surely if I debit my bank account and therefore reduce its monetary value, it's not worth as much. Shouldn't this decrease my asset, as I now have less of it? Or is it purely because of the DEALER rule, meaning debits increase it? I'm just trying to understand the logic behind it, I need it to make sense in my brain!
Hey Jack, from the customer's POV spending money is a Credit to the Bank Account (which decreases Assets).
Are you a British living in Canada?
I am indeed :)
I figured as much when the first video showed the looney, but I'm not familiar with this city. Is it in Alberta?
What will happen to millionaire Allex?
What is the other account? For the bank. When it credits my personal account (liability account to them) what is the other account they debit? Vault? Or?
Yeah you are the absolute bees knees dude. Thank you so much for this.
Cheers Mandolinn!
I find your videos very helpful. Thank you, James. Question: In your accounting basic video on Debits and Credits you stated, "Debits represent the flow of economic benefit to a destination and Credits represent the flow of economic benefit from a source." I am trying to make sense with those statements in this video. In regards to Debiting my bank account, I am putting money into my account bank. Is the destination my bank account? In other words, is my account (the destination of this money) the recipient of the economic benefit? If this is the case, then how does this work with the concept of "credits represent the flow of economic benefit from a source"? Does this concept of destination and source even play into this scenario of the POV with account holders and banks? If it does, who (or what) is the source of this economic benefit when the bank owes us our money?
I think I did a better job of explaning it in this video: th-cam.com/video/5Y3wjH-6gHk/w-d-xo.html
@@AccountingStuff Thank you ever so much for answer my question. Yes, I now think I understand it. This link - your video on DEALER: the Number 1 Hack for Debit and Credits answered my question. The key for me was that I needed to hear that Liabilities, Equity and Revenue are normal credit accounts (and therefore, the source of economic benefits, like cash in your example) and Dividends, Expenses and Assets are represent normal debit accounts, and thus are the destination of where one's cash can go. Brilliant. Thanks ever so much.
@@barryhohulin5634 Great to hear it's making sense :)
@@barryhohulin5634
The account at the bank is not ur property ..its the banks record of what thye owe u ..ie a tecord of theor liability to you...
The credit entry indicates it comes from a source ..and is laible to be returned ..
Its a credit entry on theor liability side
Utube : banks dont loan money, banks dont take deposits
This only answers half my question about this and is something I have already considered. Perhaps it lies in the meaning of the words themselves...
Which part still isn't making sense?
Why is there no more accounting videos :')
So the golden rules of accounting:
1) Debit what comes in, Credit what goes out.
2) Debit the receiver, Credit the giver.
3) Debit all expenses Credit all income.
Do they change hands with the perspective as explained in the video...plz plz plz plz tell..sir
So all the institutions couldn't be arsed to use the words correctly when representing transactions to their customers, leading to billions of people thinking the words mean basically the opposite of what they apparently do. Fuck, this is mind-bending.
So, Do you mean the bank statement issued to us is in Bank prospective ?
Exactly, it's from their point of view
So, the account holder is only seeing their side of the banks transaction? Which is, the bank crediting a liability account. Am I understanding correctly?
Yes exactly
just as at an exchange office. The buy and sell of a currency from their point of view :D
Exactly :)
*ITS ALL ABOUT PERSPECTIVE*
It sure is :)
Yep, one can depend on banks to muddy waters and confuse their customers! Customers are not asking banks for statements of banks' financial position, in which case one could understand why checking account is credit from banks perspective! The customer gets a monthly statement and wants to know their own account balance - the bank should debit the account for any money put in, and credit the account for money taken out - using the customer's perspective. The bank can use it's perspective when it reports to its shareholders!
It certainly is confusing
"checking account" as for cheque or saving account? Sorry, I am in Australia.
Mgk does Accounting!
That's a new one!