[GNC] Credit and Debit Columns in Journal View

[rcarey at duck.com]

That's a very good explanation Stan, thank you.

Richard

<goog_968996680>
https://oscar-idp.com

On Tue, 25 Jun 2024 at 20:29, Stan Brown (using GC 4.14) <
stan+gc_at_fastmail.fm_rcarey at duck.com> wrote:

> DuckDuckGo was unable to verify sender identity
>
> On 2024-06-25 12:10, rudy beuc wrote:
> > So, I get my files all set up with my desired account structure. Here's
> > the thing, in my checking account, my opening balance appears as a debt.
> > In fact what should be the Credit and Debit Column as I've seen in other
> > examples, appears to be reversely labeled. The Debit column is directly
> > next to the cleared or not cleared column. If I enter a check into the
> > checking account, it wants to appear as a credit.
> >
> > What's going on, how do I fix this?
>
> Nothing is "going on", and there's nothing to fix. Your checking account
> is an asset to you, which means that its balance is normally a debit
> (not "debt"). In transactions, a debit (such as a deposit) increases
> your checking balance and a credit (such as writing a check) decreases
> your checking balance.
>
> Assets and expenses: debit increases balance, credit reduces balance
> Liabilities, equity, and income: debit reduces balance, credit increases
> balance
>
> Your confusion may come from this: that very same checking account is a
> liability to your bank. A credit increases the balance
> _on_your_bank's_books_ and a debit decreases the balance.
>
> Because of this, ordinary consumers are used to thinking that a credit
> increases their checking account balance. And that's true -- on the
> bank's books -- but it's exactly backwards on your own books.
>
> Similar confusion reigns regarding credit cards. Your credit card
> balance is a liability to you: buying something increases your balance
> and is therefore a credit on your books; making a payment decreases your
> balance and is therefore a debit on your books. (More completely: making
> a payment, like every other transaction, has a debit side and a credit
> side. The debit side is the reduction in your credit-card balance; the
> credit side is the reduction in your checking account.)
>
> Again, ordinary consumers are confused because banks describe things
> from the banks' perspective. To them, your credit card account is an
> asset: a debit increases the balance of that asset and a credit
> decreases the balance. When you make a payment or return a purchase "for
> credit", it is indeed a credit to that account on the bank's books, but
> it is a debit to that account on your books.
>
> Stan Brown
> Tehachapi, CA, USA
> https://BrownMath.com
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