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On Wed, 2006-01-25 at 12:19 -0500, Derrick Hudson wrote:
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<FONT COLOR="#000000">On Tue, Jan 24, 2006 at 05:42:32AM -0600, Gregg Fowler wrote:</FONT>
<FONT COLOR="#000000">| On Mon, 2006-01-23 at 23:43 -0800, Beth Leonard wrote:</FONT>
<FONT COLOR="#000000">[...]</FONT>
<FONT COLOR="#000000">| > Debit/Credit is specific accounting terminology.</FONT>
<FONT COLOR="#000000">[...]</FONT>
<FONT COLOR="#000000">| To me they just sound opposite of what you are actually doing. I think I</FONT>
<FONT COLOR="#000000">| will change the setting.</FONT>
<FONT COLOR="#000000">I thought so too, until recently when I read (and understood) a good</FONT>
<FONT COLOR="#000000">description of the real meaning. I think the description I found was</FONT>
<FONT COLOR="#000000">in some gnucash-related documentation, but I don't remember where.</FONT>
<FONT COLOR="#000000">At any rate, it basically goes like this:</FONT>
<FONT COLOR="#000000"> debit goes in to the account</FONT>
<FONT COLOR="#000000"> credit comes out of the account</FONT>
<FONT COLOR="#000000">So for a savings account, debit increases your balance (you have more</FONT>
<FONT COLOR="#000000">money) and credit decreases. For a credit card, debits decrease the</FONT>
<FONT COLOR="#000000">balance (you owe less money) and credits increase it.</FONT>
<FONT COLOR="#000000">The trick is that when you receive a statement from a bank or credit</FONT>
<FONT COLOR="#000000">card company, you are seeing -their- view of the account. Their view</FONT>
<FONT COLOR="#000000">is opposite of yours. When a store gives you money back for returning</FONT>
<FONT COLOR="#000000">an item, the CC company records a "credit" on your account because</FONT>
<FONT COLOR="#000000">that money is no longer their's and is yours again. Your record,</FONT>
<FONT COLOR="#000000">however, would show a debit because for you, have more money (by owing</FONT>
<FONT COLOR="#000000">less). My intuition was wrong because I always saw the accounts (my</FONT>
<FONT COLOR="#000000">statements) from the other party's perspective and assumed credit</FONT>
<FONT COLOR="#000000">means more money (for me) and debit means less.</FONT>
<FONT COLOR="#000000">That being said, you can choose to view either set of headings. I</FONT>
<FONT COLOR="#000000">found it worthwhile, though, to finally understand what the terms</FONT>
<FONT COLOR="#000000">really mean.</FONT>
<FONT COLOR="#000000">-D</FONT>
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<BR>
I get the gist of why it is the way it is, but I will have to think about my transactions while imputing<BR>
them for a while until it becomes "natural". Eventually, it will be a natural way for me to do things.<BR>
<BR>
Thanks,<BR>
Gregg
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