Accounting can someone help me?

in cash and credit transactions I can never figure out whom to credit or debit.

For example: sold goods on credit to kelly ltd.

The rule is debit the receiving account and credit the giving account.

Is kelly ltd. receiving the goods or are we giving the goods to her.

Do I debit her or credit her.

How can I check with every transaction to see if I pick the right choice.

I have this problem with cash transactions as well.

Is there a difference between the accounts I pick to debit and credit in cash and credit transactions?

Can Someone give me examples as well as an explanation so that I can see your answers more clearly.

3 Answers

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  • Sandy
    Lv 7
    1 decade ago
    Favorite Answer

    For example: sold goods on credit to kelly ltd.

    The rule is debit the receiving account and credit the giving account.

    I don't think it's helpful to remember transactions like this. I find most students get confused easily.

    Just remember all assets and expenses are debits; all revenues, liabilities and equity accounts are credits. So,

    Dr AR (Kelly Ltd) xxx

    Cr Sales xxx

    Is there a difference between the accounts I pick to debit and credit in cash and credit transactions? - No. The only difference is between cash and AR or AP. The other half of the transaction is always the same. Taking the above e.g., if you had sold goods to Kelly Ltd for cash, it'd be:

    Dr Cash xxx

    Cr Sales xxx

    Cash and AR are assets, hence debit.

    Sales is a revenue account, hence credit.

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  • Anonymous
    1 decade ago

    When you pass accounting transactions you consider your own books. And you only see what is going out of your business and what is coming into your business.

    So if you sell something then goods go out of your business and anything that goes our of your business should be Credit. On the other hand What is comming into business? In case of credit transaction nothing is coming into business but you receive a promise to receive cash which is called "account receivable".

    So to show you journal entrires it would appear like:

    If Credit Transaction:

    Dr. Account Receivable --------- $XXX

    Cr. Sales ---------- $XXX

    If Cash Transaction:

    Dr. Cash ---------- $XXX

    Cr. Sales ----- $XXX

    Good Luck ! :)

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  • 1 decade ago

    debit to show kelly ltd. owes the money. credit would show that they paid for the goods. debit= owes money, credit= paid money

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