Where do the words "Debit" & "Credit" come from?

📚 New! Get my 2nd Edition Accounting Cheat Sheet Bundle → https://accountingstuff.com/shop Where do the words "Debit" & "Credit" come from? Latin... is the answer to that. Debit comes Debere which means "to owe" and Credit comes from Credere which means "to entrust". This is why we they're often abbreviated to Dr and Cr. The original meanings of these words are a bit irrelevant these days. It's much simpler to think of Debits and Credits in terms of economic benefit. Here's what I mean... In Double-Entry Accounting, we have two main groups of accounts: - Normal Debit Accounts - Normal Credit Accounts Normal Debit Accounts increase when debited & decrease when credited. Normal Credit Accounts work the other way around. They decrease when debited and increase when credited. This is because every Financial Transaction involves a flow of economic benefit from a source to a destination. Normal Credit Accounts represent the sources that economic benefit flow from. They include: - Liabilities - Where a business borrow funds from a third party. - Equity - Where the owners contribute the funds themselves. - Revenue - Where a business generates the funds internally. On the other hand, Normal Debit Accounts represent the destinations that economic benefit flows to. They're made up of: - Expenses - Where a business pays costs to third parties. - Dividends - Where a business distributes funds back to its owners. - Assets - Where funds are held within a business. There's a simple acronym to help you remember this.... "DEALER". "DEA" represent the Normal Debit Accounts: Dividends, Expenses & Assets. These increase when debited and decrease when credited. "LER" represent the Normal Credit Accounts: Liabilities, Equity and Revenue. These increase when credited and decrease when debited. 🔴Subscribe for more Accounting Tutorials → https://geni.us/subtothechannel 🔎FAQ ▪ My Favourite Accounting Book for Beginners → http://geni.us/5mKR7m 🎬LEARN ACCOUNTING BASICS FOR FREE ▪ The Full Playlist → https://www.youtube.com/playlist?list=PL5zKSeS09l339nB6ujJPQ9Rsv99_b-aTb 🔝 CLOUD ACCOUNTING SOFTWARE ▪ QuickBooks Online USA (FREE TRIAL/DISCOUNT) → http://geni.us/jA9N ▪ QuickBooks Online Canada (FREE TRIAL/DISCOUNT) → https://geni.us/bNN7 ▪ Xero (FREE TRIAL) → https://xeroamericas.grsm.io/ck90eoq1r6tu 🚶FOLLOW ME ON ▪ Instagram → https://www.instagram.com/accountingstuff ▪ TikTok → https://www.tiktok.com/@accounting_stuff ▪ Facebook → https://www.facebook.com/thisisaccountingstuff/ ________________________ DISCLAIMER Some of the links above are affiliate links, where I earn a small commission if you click on the link and purchase an item. You are not obligated to do so, but it does help fund these videos in hopes of bringing value to you! ________________________ #Shorts #accountingstuff