Describe how debits and credits are used to analyse transactions - Bzziii

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Describe how debits and credits are used to analyse transactions









In double entry accounting, every transaction affects and is recorded in at least two accounts. When recording each transaction, the total amount debited must equal to the total amount credited. In accounting, the terms — debit and credit indicate whether the transactions are to be recorded on the left hand side or right hand side of the account. In a T-form Balance sheet assets are recorded on the right hand side and capital and liabilities are recorded on the left hand side. At any point of time, the total of the both sides of the Balance sheet is always equal. For example, in the books of a customer all goods sold shall appear on the left (debit) side of customer's account and all payments received on the right (credit) side. The difference between the totals of the two sides is called as balance It represents the amount due to the customer.



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