Talking Cents

Small Business Accountant in Melbourne with Tips to Make Learning Debits and Credits Easier

We at m.a.s accountants, as accountants for small business in Melbourne understand that learning debits and credits could be a little bit difficult. Here are five tips to make it easier for you to understand how it works:

1. Expenses are nearly always accounted for debits. For example, when a company pays for office repairs/maintenance, it debits Maintenance Expense. If it pays a marketing agency for their marketing services, it will debit Marketing Expense.

2. Business revenues are almost always accounted as credit. When a corner store sells milk or any of their products, it credits Sales. When a bank customer pays interest on his or her loans, it credits Loan Interest Revenues in the bank’s account.

3. When an individual issues a bank check, it credits the asset account Cash.

4. When a business receives money, it debits Cash.

5. Every transaction will require a debit to at least one account and a credit to at least one other account.

Here are two examples to illustrate our five tips. A corner store records its cash sales on a particular day with a debit to Cash and a credit to Sales. A company records its $500 payment to repair a broken air conditioning system with a debit to Office Maintenance Expense and a credit to Cash.

Still confused? Do not fret, as that is why m.a.s accountants are here. We are here to help you as we are the small business accountants in Melbourne CBD. Call us now!