As you know, all accounting is based onpostings. Despite the fact that at first glance the wiring seems to be something terrible, in fact the accounting entries are just the entire accounting reflection of economic transactions. Have you purchased raw materials, repaid a loan or provided a customer with a service? All this should be reflected in the accounting department. Even the most insignificant operation should be fixed so that the final document, characterizing the state of affairs at the enterprise, the balance sheet, could be brought together. At the same time, the variety of economic operations in which the company is involved can be divided into four simple groups and, by analogy, accounting. You just need to understand the logic of these four groups in order to reveal the veil of secrecy over accounting transactions.
The first group is referred to as restructuringassets. Assets - this is what the company owns, for example, cash or production equipment. At the time when you spend your money on the purchase of equipment, you are just carrying out a restructuring. All typical postings of this group are conducted as a debit of the active account, which you increase (in the balance sheet assets are always considered in the debit) and the credit of the account that you reduce. In our example, the account will be credited, on which cash is taken into account.
The bookkeeping entries of the second group are similar toits principle with previously considered. Only in this case we are dealing not with assets, but with liabilities. The liabilities include debts of the company, as well as its capital, which can be defined as the share of shareholders in the form of investments and profits. Restructuring of liabilities can occur when you extend the loan repayment period, which means that it is transferred from short-term debt to long-term debt. In this case, it is necessary to credit long-term debt (liabilities in the balance sheet are recorded in the loan), and, accordingly, debit short-term.
The third group, in contrast to the ones considered aboveexamples, combines accounting entries that link assets with liabilities. In this case, there is an increase in both. A fairly simple example here is the company's taking a loan. In this case, additional funds appear on his account, i.e. the active account is debited, but at the same time, the enterprise's debts to creditors are also growing, which means that the corresponding passive account is credited. According to a similar principle, income is recorded, only capital is credited in this case.
Finally, the fourth group includestypical posting of accounting, leading to a decrease in both assets and liabilities. As you might have guessed, these kind of postings include debt repayment and expense accounting. In the first case, we credit an account containing information about money, while simultaneously debiting an account that takes into account our debt. In the case of expenses, we need to debit a special account reflecting the cost of production. It will then be used to calculate the profit.
Having learned all the above accountingwiring, you can easily understand almost any operation performed by your accountant. The main thing - do not forget the general principle: if something is debited, then something should be credited for the same amount. Remember also that the growth of assets is always reflected in a debit, and the growth of liabilities is, respectively, a loan. Guided only by such superficial knowledge, you can easily navigate in the basic accounting documents, and therefore, will stay informed about everything that happens at the enterprise, which is so important for making managerial decisions.
