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Debits and Credits in GL PDF Print E-mail
Written by Cecilia Chee, Singapore   
Saturday, 01 October 2011 18:41

 

 

What are Debits and Credits in GL?

 

The 'T' Account Representation.

The basic method to represent a GL account is called a  'T' account.   Each GL account has its own 'T' account.  A 'T' account is illustrated below.

  

The GL Account Name, Number and Type are located in the top section.  

The stem of the 'T' is divided into two columns. The name given to the left column is Debit.  The name given to a right column is Credit. 

Each line below the 'T' in a 'T' account is called an 'entry'. An 'entry' includes either a Debit amount or a Credit amount but not both.

How to determine if an amount is a Debit or a Credit.

The table below lists the five GL account Types and the GL Account Numbers that are used in our examples. 

The table also includes Debit and Credit columns. These Debit and Credit columns show arrows that are pointing either up or down.

When TeemWork has to decide whether a GL entry should be posted as a Debit or a Credit, it refers to the table below and finds the line that corresponds to the GL account Type that is involved.

  • If the entry to be posted involves an increase, TeemWork determines which of the Debit or Credit columns has an arrow that is pointing up. If the arrow in the Debit column points up, the amount of the increase is posted in the Debit column of the T account, otherwise the amount is posted in the Credit column.

  • If the entry involves an decrease, TeemWork determines which of the Debit or Credit columns has an arrow that is pointing down. If the arrow in the Debit column points down, the amount of the decrease is posted in the Debit column, otherwise it is posted in the Credit column.

TeemWork does this automatically for Checks and Invoices. 

GL account Types GL account Number Debit Credit
Assets 1000-1999
Liabilities 2000-2999
Revenue 3000-3999 ----
Expenses 4000-4999 ----
Capital / Surplus 5000 -5999

In TeemWork, Revenues and Expenses can only increase. A negative amount is entered when a Revenue or Expense decrease needs to be posted

Last Updated on Monday, 03 October 2011 11:49
 
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