The expression “reconcile debits with credits” is probably familiar to everyone. However, many do not even roughly understand what this means. Therefore, below we will try to explain as simply as possible what debit and credit are.

Why do you need accounting?

Why was accounting invented? In order to take into account the property of the enterprise, its liabilities, capital and, in general, all its activities.

Imagine if you counted goods in pieces, gasoline in liters, and money in rubles, then it’s not clear how to bring it all together? How to understand whether a company is making a profit or a loss, how much goods are left in the warehouse and how much money is in the current account?

Therefore, all operations, be it the receipt of amounts to the accounts of the enterprise, the write-off of material assets or settlements with suppliers, are recorded in accounting in monetary terms.

The basic rule of accounting is the principle of conservation of value. Its essence is that if some property “comes”, then the same amount should “go”. Or vice versa - when writing off a certain amount, you must receive something in return and record it in the receipt.

Debit and credit

What we talked about above is called the double entry principle. That is, any action in an organization must have 2 operations - incoming and outgoing.

To make it easier to keep such records, the concepts of “debit” and “credit” were introduced. Thus, each account is divided into two halves: debit is income, and expense is credit, the left and right columns of the account, respectively.

To make it clearer, imagine that you go to a store, take out 2,000 rubles from your wallet (let’s call it “Cashier”) and buy a dress. In this case, the amount leaves the credit of the “Cashier” account and goes to the debit of the “Shop” account. To reflect this in accounting, you need to take both of these accounts and write down 2,000 rubles 2 times:

Please note that the cost always leaves the account as a credit and goes into a debit. This transfer of value is called double posting.

What are debit and credit balances

To understand what a balance is, let's look again at a simple example.

So, you have decided to open a retail outlet selling greenhouses. It was autumn. At the same time, to make it easier for us, your organization does not yet have any money, no debts, or even the greenhouses themselves. But there is already a buyer who wants to buy three greenhouses from you for a total amount of 100,000 rubles and leave them (the greenhouses) with you for storage until spring.

• Step 1. The buyer pays you 100,000 rubles and calmly waits for spring, i.e. you have not shipped the greenhouses to him yet. Let’s make an accounting entry: since the money went from the buyer’s wallet to your cash register, we get the following double entry (our account names are conditional, of course):

• Step 2. You decide to transfer almost the entire amount received from the buyer (namely 90,000 rubles) to your account at the bank. That is, this money left your cash register (we write it as a credit), but it came to your current account (we write it as a debit). This is what the operation looks like in double entry:

• Step 3. You find a manufacturer who will supply you with greenhouses and enter into an agreement for the amount of 160,000 rubles. At the same time, you agree that this month you will transfer only half of the amount (i.e. 80,000 rubles), and pay the rest later. You transfer 80,000 rubles from your current account to the supplier. In accounting it will be reflected as follows:
• Step 4. You received greenhouses from the supplier in the amount of 160,000 rubles. This means that in the credit of the “Supplier” account we write 160,000, in the debit of the “Warehouse” account the amount will be the same:

This concludes the first month of your work and it’s time to sum up the results.

Credit and debit turnover

For the “Buyer’s Wallet” account, the credit turnover was 100,000 rubles, and the debit turnover was 0.

“Cash desk”: debit turnover - 100,000 rubles, credit - 90,000 rubles.

“Bank account”: debit turnover - 90,000 rubles, credit - 80,000 rubles.

“Supplier”: debit turnover - 80,000 rubles, credit - 160,000 rubles.

“Warehouse”: debit turnover - 160,000 rubles, credit - 0.

What is a debit balance

Now all that remains is to withdraw the balance that was obtained for all accounts. This value will be called “Total Balance”. To calculate the balance, you need to minus the smaller one from the larger turnover.

Let’s consider, for example, “Bank account”. The debit turnover is 90,000 rubles, and the credit turnover is 80,000. The first amount is larger, which means the balance is debit: 90,000–80,000 = 10,000 rubles. Let's write it down in the debit part of the account and enclose it in a red rectangle.

Now pay attention to the “Supplier” account: here the debit balance is 80,000 rubles, and the credit balance is 160,000. In this case, the balance turned out to be a credit balance: 80,000 – 160,000 = 80,000 rubles (also in the red rectangle).

We do the same with the rest of the accounts. As a result, we get the following result:

Let's look at what the balance means for each of these five accounts.

The “Buyer’s Wallet” account has a credit balance and it reminds you that in the spring you must give the buyer greenhouses in the amount of 100,000 rubles.

The balance on the “Cash” account is debit. It means that your organization has 10,000 rubles in its cash register.

The debit balance of the third account shows that you have another 10,000 rubles in your bank account.

The fourth account resulted in a credit balance, which will not let you forget that you owe the manufacturer 80,000 rubles.

Well, the last account with a debit balance says that in your warehouse there are greenhouses worth 160,000 rubles.

What's next?

You continue to work, and subsequent transactions must be reflected in the balance sheet. But first it is necessary to transfer the ending balances of the previous period to the beginning of the new one. Such balances will be called incoming balances; they must be written down in the appropriate column: debit balance - on the left, credit balance - on the right.

Let's go back to the example. You decide to transfer another 7,000 rubles from the cash register to your current account. Two accounts are involved. First, don’t forget to transfer the incoming balances along them (circled in green in the figure below), then write down the posting for 7,000 (in Ct “Cash” and in Dt “R/s”).

No further actions were taken on the accounts during this period.

At the end of the 2nd month, we first calculate the turnover, while not paying attention to the opening balance for now (the turnover is circled in blue). Then we calculate the final balance (in the red rectangle), already taking into account the opening balance. The following picture emerges:

Of course, these are rather primitive examples. In reality, in accounting, everything is much more complicated. But it is quite possible to get basic concepts of what debit, credit and balance are from this article.

Debit- an accounting term referring to the left side of an accounting account, which is in the form of a two-sided table.

In its turn credit- a term denoting the right side of an accounting account.

What is it used for?

Debits and credits are used to record each transaction that is to be recorded on balance sheet accounts. For example, receipt of payment for previously shipped goods from the buyer is reflected simultaneously in the debit of the “Current Account” account and in the credit of the “Settlements with Buyers and Customers” account.

Rules of application

By debit of active balance sheet accounts, i.e. accounts for registering assets of an enterprise, indicating the presence of assets at the beginning of the reporting period and their increase during the reporting period. For example, when funds are received, the amount received is reflected in the debit of the “Current Accounts” account.

The credit to the active balance sheet accounts reflects the decrease in the corresponding assets. For example, when paying from a current account, the payment is reflected in the credit of the “Current accounts” account.

By debit of passive balance sheet accounts, i.e. The accounts for registering the sources of funds (liabilities) of the enterprise reflect the decrease in the sources of funds of the enterprise. For example, if an enterprise receives a loss at the end of the reporting period, the amount of the loss is reflected in the debit of the “Retained earnings (uncovered loss)” account, thereby reducing the enterprise’s sources of funds.

The credit of passive balance sheet accounts indicates the availability of sources of funds for the enterprise at the beginning of the reporting period and their increase during the reporting period. For example, the profit received by an enterprise at the end of the reporting period is reflected in the credit of the “Retained earnings (uncovered loss)” account, thereby increasing the enterprise’s sources of funds.

Reflecting an operation on the debit of an account is called “debiting”, and on a credit - “crediting” the account.

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The economy will be put on a strict diet, and import substitution will be offered as “vitamins”.

Options for the country's development next year are being actively discussed not only at the political level, but also in expert circles. How will the economy grow? What is more important - increasing wages, pensions or fighting inflation? What will the dollar exchange rate be? How can you get a deficit-free budget? Deputy Director of the Institute of Economics of the National Academy of Sciences of Belarus Garegin VARDEVANYAN voiced his point of view on these issues to NG.

Garegin Levonovich, for next year the forecast was based on growth of gross domestic product of 5-5.5 percent. Let's start with something simple: how will this affect the standard of living of each of us?

In principle, GDP growth is associated with increased well-being. Obviously, the more added value is produced, the greater the opportunities for its distribution between citizens, enterprises and the state. But it's not that simple. We must not forget about the qualitative characteristics of this growth. Say, the same amount of money can be earned in one day of work or in three days, producing one or three units of production. Here the quality of the work or product produced comes to the fore. You can have GDP growth, but at the same time face a decrease in the exchange rate of the national currency, which depreciates the wealth earned. This is why it is important that economic growth is achieved not at any cost, but by maintaining a stable exchange rate and low inflation.

To achieve this, the government intends to tighten monetary policy and reduce emission lending to the real sector of the economy. But then how will we grow and finance government programs? Will I have to turn on the printing press again?

Next year should be a year of economic recovery. It is necessary to eliminate the consequences and imbalances that have accumulated recently due to the devaluation of the ruble, accelerated inflation, and so on. The imbalance in the economy was caused by the fact that we spent more than our income allowed. The main source of the subsequently recognized “living beyond one’s means” was excessive lending to the real sector, including preferential lending for housing construction and other government programs. In many areas you can afford to cut costs without much damage.

Over 10 years in Belarus:

• Almost 1.5 thousand import substitution projects have been implemented
• More than $3.8 billion invested in import substitution programs
• Produced import-substituting products worth $14 billion
• 12 percent of imported products were replaced.

The main source of growth should be external demand for Belarusian-made products, which will allow us to achieve a positive balance of foreign trade. In this context, a great help for us is the reduction in prices for Russian gas, on which we can save up to two and a half billion dollars.

But so far, what we sell for export does not pay for the import of energy resources, materials and components. How to get out of this situation?

There are only two ways here. First, since we cannot influence the prices of imported raw materials, materials, and components, we need to increase the share of added value in products produced for export by improving their qualities. The second is to develop import substitution. Of the total volume of imports, approximately 75 percent are so-called intermediate imports, which we are fundamentally unable to replace due to the lack of natural resources: hydrocarbons, metals, natural gas. There is also a group of consumer goods that cannot be refused imports: tea, coffee, citrus fruits...
At the same time, import substitution can and should be carried out for many goods, but not in the primitive interpretation of this term. It should not become an end in itself. In each specific case, it is necessary to calculate whether the game is “worth the candle.” Import substitution should be based on the implementation of those projects and for those product items for which we are not able to compete with foreign manufacturers. Attracting foreign investment from companies with a world-famous brand will help not only satisfy domestic needs, but also increase exports. The state’s attention should be focused on such projects, including in terms of creating attractive conditions for investors.

It is impossible to achieve balanced economic growth without curbing inflation. How realistic is it to keep it in the 19-22 percent range? And what is the basis for the forecast of an exchange rate of 9,150 rubles per dollar?

It all depends on the balance of monetary policy. The main thing is to prevent excessive growth of the money supply in circulation and not to spend more than you earned. At the same time, it is necessary to tighten antimonopoly legislation. In our economy, the elements of monopoly are quite strong, so the temporary use of state regulation of prices for certain goods to curb high inflation is quite justified. But you shouldn’t get carried away with this.
As for the exchange rate, it is formed based on the ratio of the mass of rubles and foreign currency in the economy. To a rough approximation: if the number of rubles doubles, but the same amount of foreign currency remains in circulation, it means that the ruble will depreciate approximately twice. That is, there must be a balance again...

Next year a deficit-free republican budget is planned. How is this possible: will we earn more or spend less?

At the end of this year, a budget surplus is expected at 0.7 percent of GDP. That is, the treasury will receive more income than it spends. Next year, the growth of republican budget expenditures is planned to be slightly, but still ahead of the average annual price increase. This means that social items of budget expenditures in real terms will be higher than this year.

Why is the government talking about the need to limit domestic demand? Is it not profitable for enterprises to increase production and sales volumes?

The criterion for stimulating or compressing domestic demand is financial stability in the economy. Demand can be expanded only within acceptable limits that do not lead to an increase in the level of inflation and destabilization of the exchange rate. In the current situation, limiting domestic demand is precisely intended to stop the process of rising prices. If this is not done, sooner or later inflation will lead to a decrease in production volumes.

Apparently, to limit domestic demand and financial recovery of the economy, such a tool as increasing the refinancing rate is used?

Absolutely right. By increasing the refinancing rate, the National Bank, on the one hand, reduces the demand for credit resources, as they become more expensive. Naturally, for many enterprises this is a serious shake-up: in order to survive, they need to rely on their own strengths, work more efficiently, increase production profitability, and seek investment. On the other hand, the attractiveness of ruble deposits increases. The more income ruble deposits bring, the more willingly people bring money to the bank, and there is an incentive to save what they earn rather than spend it. Diverting money into savings reduces pressure on both the commodity and foreign exchange markets. Accordingly, prerequisites arise for reducing inflation and stability of the exchange rate of the Belarusian ruble.

Instructions

To determine where debits and credits are, look at a business transaction. Typically, a debit represents what is owed to you, and a credit represents what you owe. For example, you are working with some counterparties. The amount you must pay for the goods will be reflected in the credit balance. In the event that buyers owe you, the amount owed will be taken into account as a debit.

If you see a business transaction journal in front of you, pay attention to the fact that all transactions are recorded twice, that is, there will be the name of the movement, and then two columns. To determine which of them is a debit and which is a credit, it is enough to know that debit is always recorded on the left side, and credit on the right.

To determine debits and credits, you must know that if the account is active or active-passive, an increase in the debit balance leads to an increase in the organization's assets. Whereas an increase in credit on these accounts leads to a decrease in the value of the property.

The balance is always tied to a specific period. In the “pre-computer” era, the accounting period was . The initial balance was transferred from the final month, but the ending balance of the current month had to be calculated manually. Now in accounting programs balances are displayed on an arbitrary date.

Active accounts. The reporting period begins with accounts, debit balances (Db_Start). Receipts to these accounts are reflected in debit turnover (Db_Turnover), and disposals are reflected in credit turnover (Cr_Turnover). The period ends by counting debit and credit turnover and displaying the final balance (Db_End), which will then move into the next reporting month: Db_End = Db_Start + Db_Turn – Cr_Turn

The reporting period begins with accounts that have credit balances (Cred_Start). Receipts to these accounts are reflected in the credit turnover (Kr_Turnover), and disposals are reflected in the debit turnover (Db_Turnover). The reporting period ends by counting credit and debit turnover and displaying the final balance (Kr_end), which will then move into the next reporting month: Kr_End = Kr_Start + Kr_Turnover – Db_Turnover

Active-passive accounts. Such accounts have both a debit and a credit balance. The final balance is displayed as follows: If the sum Db_Start - Cr_Start + Db_Turn - Cr_Turn is greater than zero, then it is placed in the final balance in debit, and zero is written in credit. Otherwise, the minus is removed and the received amount is written to the final balance of the loan, and zero is written to the debit.

In real accounting, each account has its own role. For example, the “Salary” account. Here the accounting period is most often a month. The opening balance for each personal account is the unpaid salary of the previous month (debt owed by the company), or the overpayment of wages last month (debt owed by the employee). Accordingly, these are the debit and credit parts of the opening balance. You need to calculate the final balance (essentially, the salary of the current month) according to the following scheme: Debt due to the enterprise – Debt due to the employee + Accrued – Withheld. If the result is positive, you have something to receive this month.

Sources:

• ending loan balance

In accounting, a balance is the difference between the debits and credits of a particular account. This indicator is used to identify balances for a given type of economic assets for a certain period and is calculated when compiling a balance sheet. In order to find the balance, you must first determine the nature of the account.