Talk:Debits and credits

Keeping it simple

This article needs to be simple and concise. (my opinion too - 81.6.48.229 (talk) 16:30, 12 August 2011 (UTC)) If you don't work in the bookkeeping or accounting area, trying to grasp the concept that you don't use positive and negative expressions, but instead use Debit (Dr) and Credit (Cr) to indicate the state of the value. It is tempting to try and explain with examples showing asset examples, liability examples etc. Double-entry bookkeeping, General Ledger and Trial balance go into detail about these topics and have examples. We need to use more linking rather than try and explain everything again. This appear to have lead to confusion looking at all the wiki tags at the top of the article page.

This is such a terribly written article. The map analogy was a horrible idea and should be removed. —Preceding unsigned comment added by 209.163.177.66 (talk) 21:54, 28 September 2010 (UTC)

Agreed. This article is really, really bad, in terms of both style and content. That awful map analogy has to go. I came here looking for a simple information and am now really confused. SaintedLegion (talk) 11:55, 30 September 2010 (UTC)

Can someone confirm this statement

An account represented in a way opposite to what would be expected, such as an asset account recorded as a credit, is referred to as a contra account. An example would be accumulated depreciation, which is a contra asset account, as it reduces the value of an asset.

This was the second paragraph, I have removed it as 1. It confuses the reader 2. Is the terminology used correctly NilssonDenver (talk) 20:26, 7 August 2010 (UTC)

The terminology regarding contra accounts is correct, but it is poorly worded. Accounts have what can be considered a "default" balance. Assets have a debit balance, liabilities and equity have a credit balance. Contra accounts have the opposite balance of what is expected, i.e. accumulated depreciation is a contra-asset account and has a credit balance.

http://www.nysscpa.org/glossary/term/194 http://www.nysscpa.org/glossary/term/734 —Preceding unsigned comment added by 66.68.143.5 (talk) 19:25, 15 October 2010 (UTC)

Copyright problem removed

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Origin of debit and credit

I've completely rewritten this section, and removed the bit about the terms descending from Middle French. That idea makes sense, but it also makes sense that the terms descended from any number of Latin/Romance languages, and I couldn't find a reference for it. If you know of one, it would be appropriate to include that in the origin section as another theory of the origin of the terms. Ivanvector (talk) 17:48, 6 February 2011 (UTC)

Merger and clean-up of Debits and credits page

The merger proposal of the Debits and Credits (IFRS) page to the Debits and credits page will be updated as soon as possible. Please post any objections to the merger ASAP as I will be updating the page within the next few days of this post. Any assistance or comments related to the revision would be greatly appreciated. Sweetmat (talk) 19:45, 3 March 2011 (UTC)

Removal of "unclear" banner

It is not Wikipedia policy to tag an entire article as being unclear. Sections or paragraphs that are unclear should be marked up see: Wikipedia:Please clarify for more instructions on how to tag parts of an article that are unclear. Sweetmat (talk) 14:30, 13 March 2011 (UTC)

Globalize

The Article primarily concentrates on the American or Accounting Equation approach. The Traditional approach is not well dealt here. All examples are also from the American approach. There should be separate sections to deal with the two approaches.-- R.Sivanesh ^{✆ ©} 17:05, 13 July 2011 (UTC)

Please explain the “traditional” approach if you decide to add your information back onto this page. You should note that there are some grammatical errors in your information and there are no citations or forms of evidence to substantiate your claims. Please reconsider your additions and make revisions to your statements. Sweetmat (talk) 17:37, 29 July 2011 (UTC)

Can you suggest a reference that explains the difference between American accounting and European accounting? Greensburger (talk) 18:21, 14 July 2011 (UTC)
I agree with Greensburger, there is no such problem as accounting within the United States and Europe is similar and both are based on the same principles bar a few minor terminology differences. I elect to remove this banner from the page. Sweetmat (talk) 14:47, 25 July 2011 (UTC)

From what you people are discussing, it seems that you are no aware that there is another approach in accounting. So let me explain it for the knowledge of all those who dont know that is another approach. Under the traditional approach all accounts are classified into three types namely, Real Accounts, Personal Accounts, and Nominal Accounts. Consequently there are three rules to determine what is debit and what is credit. The rules are known as the golden rules of accounting. The Golden rules of accounting is as follows:

1. Real account: Debit what comes in and credit what goes out
2. Personal account: Debit the receiver and Credit the giver
3. Nominal account: Debit all expenses & losses and Credit all incomes & gains

This approach is also explained in Double-entry_bookkeeping_system#Traditional_approach. For more info you may refer pages 30-34 in [1]. Is this sufficient to add back the content?-- R.Sivanesh ^{✆ ©} 12:30, 1 August 2011 (UTC)

I can now see where you are coming from and I do understand the terminology. The reasoning for my changes is due to the fact that you were not being very specific in your earlier additions and that there were no citations evident. I am not the gatekeeper of this topic though I do try to uphold a good quality standard and your earlier additions were vague and did not seem to fit in anywhere. If you look at the bottom of the Debits and credits page you will see the section for Real, Personal and Nominal accounts and you can see that I have requested that this section be expanded. Please consider placing your contributions there. Sweetmat (talk) 14:01, 1 August 2011 (UTC)

The British approach you described is so greatly different than the American approach, that to add a full description to the present article would be greatly confusing to American readers. A new article Debits and credits (British approach) should be written that explains this "traditional approach" to non-British readers. Please do not title it "Debits and credits (traditional approach)" because to Americans the traditional approach is the American approach. The new article should explain in detail the meaning of "real account", "personal account" and "nonimal account" and how they interact. This bulky material would be greatly confusing to American readers if added to the present article. Greensburger (talk) 14:20, 1 August 2011 (UTC)

Another reason why some have not elected to use the "traditional" three-rule approach is that it caused more confusion. With the five rule approach there seems to be less confusion as it is more structured and specific (see earlier editions of this article and you will see the three rule approach which caused major confusion with people). I like Greensburger's views on this issue, though I do not think that the five rule approach is only American based as many Europeans use the five method approach today. Creating a new article I do not think is the answer either, as I tried to make my own article specifically for European users (see more talk above) based on IFRS only and it was seen as redundant. I then merged the two articles into what you see here today. I do agree that the three method approach should not be "over inflated" as users to this page are looking for up-to-date and clear information to learn from. I think that it is evident that clarity in this article is priority. Sweetmat (talk) 14:37, 1 August 2011 (UTC)

I just noticed the "Real, personal, and nominal accounts" section at the end of the present article. So I added the three rules to that section. Greensburger (talk) 15:35, 1 August 2011 (UTC)

I personally feel that there should be one single article which clearly explains both the approaches. The two approaches should be clearly termed as "American or Accounting Equation Approach" and "British or Traditional Approach". This will not only give an insight to the American users but also will kindle their interests to read the article further. A separate article will spoil the whole sequence and serve no purpose. -- R.Sivanesh ^{✆ ©} 17:21, 1 August 2011 (UTC)

I agree about the single article - the present article. That is why I added the 3 rules to the present article in the "Real, personal, and nominal accounts" section. This section should be expanded to explain the historical reasons why there are differences, the pros and cons of each approach, etc, which is outside of my knowledge. Greensburger (talk) 20:40, 1 August 2011 (UTC)

Looking much better

I think that this page has had some great additions and the content seems to be mostly there. I think that people who are interested in adding to this page should consider expanding the section on Real, Personal and Nominal accounts so that the content is up to standard. There are however a few pointers that are to please be considered:

• There are not enough citations and therefore content that is not cited well and not verified after a reasonable amount of time must be removed. Please help investigate and cite information added to this page.
• Whilst the content on this page is sufficient, the structure needs some work. I propose that the section headings be revised and that redundant content be merged together so that there is not a conflict of ideas.
• People with an excellent level of English ability should please review and revise the content that has questionable style or has bad grammar.

A thanks to all that have helped improve this page over the last few months. As always, due to the somewhat complex content of this page, any additions should be made as clear as possible for viewers.--Sweetmat (talk) 10:18, 9 August 2011 (UTC)

Left and right side

"'Dr' (Debit) simply means left side of a ledger account" - so did I understand correctly, if I turn the sheet upside down, left becomes right, debit becomes credit and the balance of the account is negated in sign?81.6.48.229 (talk) 16:29, 12 August 2011 (UTC)

Technically, from what I understand from your statement you are to some extent “correct” though I would not try to understand this topic solely based on this statement: "'Dr' (Debit) simply means left side of a ledger account...”. I would advise you to read the section labelled "Elements" to explain the difference between the terms "Debit" and "Credit" more thoroughly, depending on the type of account based on the five accounting elements or rules. Please post more comments here should you require more information so that we may improve the understanding of this topic to all viewers.Sweetmat (talk) 19:22, 14 August 2011 (UTC)

Greensburger: Regarding your comment on an edit of the liability section: "It becomes an expense only when it is paid, not when it is a debt to be paid later," you must be referring to the cash accounting method. In accrual accounting, it is different: the service becomes an expense when it is performed, and a good becomes an expense when it changes hands, regardless of when it is paid for. See Comparison of cash and accrual methods of accounting. Heyzeuss (talk) 19:32, 29 September 2011 (UTC)

Good point, so I added "accrued expenses". Greensburger (talk) 01:13, 30 September 2011 (UTC)

Etymology rewrite

I've been away from this for 8 months and you folks have done a great job cleaning up and rewriting this article! Wow, was it ever a mess before.

I've replaced the Etymology section (formerly "origin of debits and credits") with the text I put in that space several months ago. It's interesting to see the evolution of that section. A year ago, there was a block of uncited text about the terms descending from Old French, and another editor tagged it as needing a citation (which it does). I went looking for one, and, frankly, there isn't. What I did find was the source that I cited before, not necessarily about the origin of the words but at least about how they were used in the 15th century in an important historical business text.

Over the next few months, as the article was greatly improved, another editor came along and overwrote that section with a self-referenced section about the definition of the words in an unspecified accounting dictionary, starting with this edit. Over time several other editors tried to improve that definition but it seems it was eventually deleted or lost. Separately, someone else created the etymology section and inserted basically the same Old French definition, except with Italian added in. And that is basically the same definition that I've become familiar with as an accounting student, except that I can't actually find it written in any of my textbooks. It's like an oral tradition or something, folklore that we all believe and that makes sense if you try to think about it, but there's nothing verifiable to cite. So I've replaced it again with what I wrote before.

Anyway, sorry for the narrative, and I don't mean to be combative and will certainly bow to consensus, but the Pacioli description with a working link is better than the Old French theory that is missing a citation. Unless someone has a citation for it, that is. — Preceding unsigned comment added by Ivanvector (talk • contribs) 01:32, 24 October 2011 (UTC)

Unnecessary/useless banners

Please indicate specific sections that need to be corrected and do not tag the entire article. Or rather place the banner in the section that contains the errors.Sweetmat (talk) 21:42, 19 November 2011 (UTC)

Please make use of the following link for cleanup templates Wikipedia:Template messages/Cleanup and use specific templates only.

Radical reformation

To me this article had become a collection of disjointed and in some cases unrelated sections trying to explain Debits and Credits. I have taken the bold and radical move of rewriting much of the article and combining and summarising sections already in the article. There were far too many examples which to me did not explain what a debit or credit is or what it does.

  A Debit value increases a Debit value or decreases a Credit value. A Credit value increases a credit value or decreases a Debit value.

In isolation in an article like this, it is difficult to explain the above statement without also understanding the Double-Entry bookkeeping system. Simply making the article longer will not explain it any better. NilssonDenver (talk) 22:44, 25 November 2011 (UTC)

This article is for people who do not fully understand what debits and credits are and what they do and why accounting is done that way. To such people, only examples can make this understandable. Lots of examples. This article is not a place to attempt brief definitions. Your sentence "A Debit value increases a Debit value or decreases a Credit value." is nonsense to readers who do not yet grasp the basic concepts. Your attempts to improve the article actually make it much worse. I am reverting, because the prior version contains much that should be part of the article. Greensburger (talk) 18:25, 26 November 2011 (UTC)

I agree with Greensburger's statements in this instance. What you did earlier in my opinion was far worse than what stands here today (you deleted key information and just about everything else). Your work had no citations and did not seem more informative or easier to understand for novices or professionals. Please do not take this criticism as a personal attack and your contributions are requested though I do not think that we need to "be bold" with the current article. Tweaking the article now is the focus. The article has improved greatly over the past few months and is receiving great ratings from the community at large. Rather consider revising sections that are marked up or make smaller but meaningful changes elsewhere in the article. Sweetmat (talk) 09:32, 28 November 2011 (UTC)

In addition to my previous comment, the size of this article is not too large to be reduced so significantly according to wikipedia standards (see: Wikipedia:Article size) for more information.Sweetmat (talk) 11:59, 28 November 2011 (UTC)

English accounting is not 'backwards'

From the article:

"In the American system of financial accounting or bookkeeping, an increase (+) to an asset account is a debit. An increase (+) to a liability account is a credit. In the English system, the entries are reversed."

I'm lost here - people in England don't account the opposite from people in America? We all do it the same way the world over, Dr to increase an asset. Have I misunderstood or is this some kind of mistake or I'm misunderstanding the use of the terms "American Accounting" and "English Accounting"... al a 'Dutch Auction' or 'Indian Gifts'? — Preceding unsigned comment added by 83.244.197.164 (talk) 10:59, 16 February 2012 (UTC)

This seems to be somebody's misunderstanding or mistake. I have reverted it because the edit was made without citing a reliable source. But even if a reliable source can be found, if hardly anybody in the UK does it backwards, it should not be presented in this article. There are numerous examples of non-standard practices. For example some printed calendars put Sunday to the right of Saturday, but that fringe practice should not be mentioned in the calendar article. Greensburger (talk) 14:05, 16 February 2012 (UTC)