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I am CAT student and i am confusing in the topic MA1 management information of double-entry bookeeping.
May i ask how to identify debit and credit?its easy:
assets: dr + , cr –
expenses: dr+, cr-
equity: dr-, cr+
liability: dr-, cr+
revenue: dr-, cr+hope this helps
if the question asking me what would be the double-entry for payment of an mount owing to a supplier,how can i identify the debit and credit?
good question. this is where u need to analyse the transaction.
so.. u r paying money to a supplier to whome u owe money. this means u bought goods from him on credit.
so.. initially when u bought the goods on credit, u did 2 things:
1. increased you liability – which means u CREDITED your supplier
2. you increased your ASSETS (PURCHASES) – Which means u DEBITED.NOW, when u r paying the supplier, what is happening?
1. you r decreasing ur liability – which means you will DEBIT the supplier
2. you are decreasing your asset, in this case, CASH. THUS U WILL credit the cash.
your payment entry will be:
Dr Supplier
Cr Cash/Bank———————————
always study the the given transaction and try to identify which type of account (asset, expense, equity, liability, revenue) is being affected, then see if these accounts r being increased or decreased by the transaction, then simply apply the rules i wrote above.
its a bit difficult in thhe beginning but soon it will become second nature.
good luck..:)
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