Tag Archives: pacioli

Happiness Is

Happiness Is When
Debits = Credits

Debits and credits can seem quite confusing.  Many people are used to receiving money when they get a credit from their bank and so associate that with being a good thing.  They may then conclude that a debit is the opposite, so therefore a bad thing.  This is especially so in the banking world because a debit from the bank means they are taking money from your account.

Debits (dr) and credits (cr) themselves are neither good nor bad.  They are simply the two possible entries that can be made in a double-entry bookkeeping system.  A debit will increase an asset or expense, and a credit will increase a liability, an equity, or an income. These terms, and double-entry bookkeeping, were first used in 1494 by Luca Pacioli.  He described this system that was used by Venetian merchants, traders, and bankers.

If debits and credits still weigh you down, let us give a helping hand.  Contact us if you need help with the bookkeeping for your business!