Does thinking about the difference between debits and credits make your head spin?
In accounting, there are two sides to every transaction. Each time money is made or money is spent, there are two sides to it, one is always a debit and the other is always a credit.
Watch this week’s video to gain a better understanding of debits vs. credits and why keeping track of both matters!
If you use software like Quickbooks, this may be easier for you to understand. For example, if you purchase office supplies and use your credit card, that transaction is going to be recorded with $50 from your credit card and $50 to the office supplies category. Think of it as the credit is the source and the debit is the destination.
This is called double-entry bookkeeping or double-entry accounting, and it’s very important to do your bookkeeping this way to be sure all of your accounts are accurate at all times.
If you are using a good software, like Quickbooks Online, it’s doing all the background work for you!
Want to learn more about debits and credits?
If you’d love to learn more information about bookkeeping for your business and accounting terminology, sign up for my free bookkeeping course.
This course is perfect for small business owners wanting to get a bookkeeping system in order and a better understanding of the who, what, when, where, and why of bookkeeping your business.