What is debit and credit in the ledger? What Is the Difference Between a Debit and a Credit?

 


A simple ledger is a record of every single transaction a business makes. Each ledger has accounts and entries that represent these transactions. There are two sections in a simple ledger - a debit side and a credit side. For each transaction, you enter a debit and a credit entry in the ledger. In the end, the balance on both sides should be the same.


When I was a kid learning accounts in school my teacher taught us three golden rules for the credit debit entry book.


  • Debit what comes in and credit what goes out.

  • The one who is receiving the money is debited in the credit debit entry book. The one who is giving money is credited. 

  • The expenses or losses are shown as a debit entry and incomes or gains are shown as a credit entry.



Difference between credit and debit entries

The debit and credit entries are made in the 3 main accounts in any business.


  • Personal - Drawing money for research or paying the staff. The expenses that you incur while running your business.

  • Real - Your assets like furniture, machines, etc. And your liabilities 

  • Nominal -  Your income or revenue. Also any profit or loss you make in your business transaction.

Let me explain the difference between credit and debit entries with a few examples of entries made in the credit debit entry book. 


Example 1: You buy raw material for your business from Mr. X. Raw material coming in will be a credit in the assets account. Money payable to Mr. X goes into expenses also known as expense khata and is shown as credit.

Example 2: When you make a sale to Mr. A, in a simple ledger you must make a credit entry for the money you earned in the revenue/income account. For the same transaction, you debit your expense account. 


Making so many transactions and then recording them on the right side of a ledger can be time-consuming and challenging. Digichal is a digital khata app that is the best billing app for mobile that will save you time in creating the entries and managing your finances. Download the app and devote yourself to more critical business tasks.


Read More...

Also, Visit What is Khata Book App? and the benefits of digital khata

Comments

Post a Comment

Popular posts from this blog

What Is Dukaan App? How To Use And Who Can Use The application?

Image
For every small need, the customers are now placing orders at the digital dukaan online app . Customer these days wants convenience and safety before they place their orders. Rather than standing in a queue or touching items on the aisle; they prefer ordering delivery to their doorsteps. If you are also thinking of turning your business into a digital dukaan , now is the time.  No matter what’s the size of the business, anyone can turn their physical store into an online store. All you need to do is simply download the app.  Those businesses that flourished post-pandemic were those that turned their business into a digital dukaan . Gone are the days when small businesses were scared of technology. They were worried that their inexperience with technology will become a roadblock. They were afraid to explore how technology can turn their business into digital dukaan online .  Technology transformation The technology transformation began when small business owners started switching to the
Read more

How does Digichal benefit you in setting up an online store for your business?

Image
DigiChal’s app offers a digital khata book and a feature to create your own online store. Focused on small and medium-sized businesses, No matter how big or small your business is, the app helps you build digital khata to save you time on managing your business transactions. The feature allows you to store sales, expenses, and udhaar transactions. When the time comes, you can easily access information related to any transaction done.  Within the same app, you can cater to the increasing demand of your customers for convenience. Big players in the market have built platforms where customers can buy any product through various sellers and get the benefit of cost and quality. It becomes a challenge for small and medium-sized companies to compete with them. But with the digital dukaan feature, they can easily set up their online store and start selling their products directly to their customers.  Switching to the digital khata business was not an easy step for small and medium-sized enter
Read more

Digichal Digital Khata book or digital dukaan for your retail business

Image
Digital khata app s have helped solve a large risk associated with using the old system of diary khata, i.e. losing or misplacing the register or having it damaged. With the advent of the internet and the growing digital age, online payment modes and use of online platforms to place orders are now the norm, and going digital is the need of the hour. To ensure smooth operations and long-term profit, it is imperative to keep track of your accounts on a timely basis. As the world opens up, there are no longer any boundaries to selling products and services around the world. One shouldn't limit one's business to a small town when one can expand globally? Digichal helps businesses that have limited investment funds to turn their business into a digital khata business . Their mission is to help small and medium-sized businesses solve their financial accounting challenges at the same time compete with the big fish in the market. Installing the Digichal app is easy, and you can use it
Read more