Now, to accounts, the company has ten thousand dollars worth of products which it is not expected to pay for after three months. Company A is expected to pay for that product after three months, but it has already received the products. ExampleĬonsider, for example, a Business called company A, which receives orders worth ten thousand dollars from one of its suppliers. The debit goes to the left side of a T-accounts book, whereas on the right side is where the credit is entered. This makes it easy to track any issues, financial imbalances, or any other problem by checking both the debit and credit entry.įor an accounts book to balance, the credit side of the accounts book must be equal to the debit side of the accounts book. The debit and credit entries create double entries for every single transaction.

The history of double-entry bookkeeping goes back to almost a thousand years! It is the standard across every financial industry.

This is known as the double-entry bookkeeping method. When an entry is done, at one side it is entered as debit, while on the other side of the accounts book, it is entered as a credit. Debit and credit are the opposite sides of the same coin in accounting terms.

Debit credit