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Hi,
I seem to be having trouble with a basic concept.
I understand that in a T account Debit means the left hand side and Credit meant the right. Am I correct in thinking that in T accounts the term Debit also means money coming into a business and credit means money going out of a business (the opposite meanings to those on my bank statement)?
Thanks
NickYou are basically correct.An increase in assets is a debit and a decrease is a credit.An increase in capital is a credit and a decrease in capital is a debit on the t-account.An increase in liability is a credit and a decrease in liability is a debit.The reason a bank statement shows the opposite entries is that the bank statement is prepared from the banks point of view.
Nick: what mrjonbain has written is correct.
I do suggest you watch my free lecture on this – I think it will help you.
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