How to enter insurance claims?

Derrick Hudson dman at dman13.dyndns.org
Sat Jul 1 21:02:47 EDT 2006


On Sat, Jul 01, 2006 at 12:08:56PM +0800, Wouter van Marle wrote:
| On Fri, 2006-06-30 at 12:04 -0400, Anthony wrote:
| > On 6/30/06, Wouter van Marle <wouter at squirrel-systems.com> wrote:
[...]
| > > You mix up debit and credit.
| > > Credit adds, debit deducts.
|
| > No, the original is correct.  Debits increase assets and expsenses.
| > Debits decrease liabilities and income.  Credits increase liabilities
| > and income.  Credits decrease assets and expenses.  See
| > http://www.dwmbeancounter.com/tutorial/DrCrTChart.html
| 
| OK this confirms my second part:
| 
| Just don't use them :) I'm even more confused now and consider removing
| the terms from my vocabulary entirely. Way too confusing.

Here's how I eventually understood the terms:

When you receive a statement from your bank (or credit card issuer),
you are seeing the account *from their perspective*.  This is why it
is common to think "debit=less" and "credit=more".  In actuality, from
your bank account a debit is decreasing the money the bank is holding
in that account.  Similarly for the credit card:  a "credit" means the
CC issuer has less money (owed to them), and you have more money.
Thus it is a debit on your record and a credit on theirs.

HTH,
-D

-- 
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www: http://dman13.dyndns.org/~dman/            jabber: dman at dman13.dyndns.org
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