For a self-audit of accounting for a long time, a balance was invented. Balance is an equilibrium, its meaning is that nothing is going anywhere in the enterprise, and assets are always equal to liabilities.
The balance consists of the total turnover on the debit and the credit of the accounting accounts for the reporting period.
What is credit and debit
Credit and debit (stresses are always placed onThe first syllable) are concepts that are used in accounting to monitor the company's business processes. There are a lot of accounting accounts, more than a hundred, they are created in order to more closely reflect every operation of the life of the company. Each account has its own number and name.
Under the debit are understood all the assets of the enterprise, thenThere is more than it has at the current date. This can be cash in bank accounts, cash on hand, the total cost of materials in warehouses, the amount of the value of fixed assets, the debt of counterparties. The higher the organization's assets, the more successful and larger it is.
Liabilities or credit turnovers are debts andSources of formation of assets. Debts include: arrears in payment of wages, debts to counterparties, depreciation, debts to the founders or owners of the firm for the distribution of profits. Sources of formation of assets are, for example, charter or other capital.
What is the use of the debit and credit turnover
The record for each account is kept separately. It looks like this: the debit in the context of the account is written on the left side, and the credit on the right. Each transaction is reflected in the posting. A particular account can often be used during the reporting period. The amounts are recorded in the columns of the debit or credit, depending on the type of operation. By nature of the balance of accounts are divided into active, passive, active-passive.
Increasing the turnover of debit in active accounts or active-passive means an increase in the organization's assets or the existence of rights of claim. The increase in credit turnover, on the contrary, shows their decrease.
In passive accounts, transactions are reflected in reverse. These accounts exist in order to be seen from where and at the expense of what funds were received to the organization.
At the end of the period, the turnover of debit and creditAre added separately. The resulting final balance is obtained. If the amount of turnover under the debit and under the loan coincide, the account is closed, as it is reset. There are a number of accounts that necessarily have a zero balance at the end of the period, mainly these are accounts for which expenses are written off.
The meaning of the existence of debit and credit reflectsDouble entry. The essence is the name - double. That is, one operation should be recorded twice, using two accounts. On the first account, the amount of the transaction goes to debit, on the second - to credit, the balance is obtained. Therefore, the balance should always converge. If the total turnover of the debit does not converge with the total turnover of the loan, then somewhere an accounting error is made.