ACCOUNTING

The crazy language of double entry:
‘Increases in assets are debited to asset accounts.
Increases in liabilities & owner’s equity are credited to liability & owner’s equity accounts
INCREASES in ASSETS are DEBITED,
and INCREASES in LIABILITIES are CREDITED.
Beyond me.                                                                                                   Apparently the accounting guild has been forcing students to accept this semantic nonsense for centuries instead of a doing a simple language reform:
[To understand I do not need some deep truth to justify the nonsense, just some clue to the psychology and thinking that led to the odd uses of debit and credit]

“Accountants will debit asset accounts to increase them while crediting liability accounts to increase them the same reason they debit expenses to increase them and also credit revenues to increase them. This is because of the double-entry system. In the equation assets = liability + stockholders’ equity you have to do the opposite to assets than you would liabilities and stockholders’ equity. So, because you debit assets you would do the opposite to the other side to balance the equation and therefore credit stockholders’ equity. So if someone gave the company $10 in exchange for stock, the accountant would debit assets $10 and to balance the equation credit stockholders’ equity.”
“This is because of the double-entry system.” = we do it this way because we do it this way, however disconcerting, – shows how clever we are.

 

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