Accounting terms – debit and credit

Written by Briana Cavanaugh

February 10, 2009

There were two specific terms that were challenging for me because them mean different things are different times – or so it seemed.

You see a debit is an accounting entry which results in either an increase in assets or a decrease in liabilities or net worth. Opposite of credit.

Where as a credit is the opposite.

But when you look it up the definite says nothing about accounting entries. It talks about consumer credit and lines of credit. So when the banks loan you money, they see an increase in assets (especially because they’ve been lending on a 1:40 ratio). A credit is an increase in liabilities – for you. So while you receive cash, you’re worth less money because of it.

Interesting no?

An affirmation to work with around credit and debt: My debts represent my and other’s belief in my future earning potential.

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