Debit and CreditThe way we use to explain how to consider events in terms of the basic equation is very didactic, but impractical in practice. Imagine the complexity of the chart in an entity with many events occurring daily and with a high level of detail. This entire process can be simplified with the debit and credit mechanism.In accounting language, debit does not mean something negative; likewise, credit is not something good. In reality, in each event, we can answer two crucial questions:Where did the resources go? That is, what is the destination of the resources?Where did the resources come from? In other words, what is their origin?In each event that occurs in the entity and is recorded by accounting, these two questions must be asked. The answer to the first question, what is the destination of the resources?, corresponds to the debit. While the answer to the second question corresponds to the credit. In each event that occurs in an entity, there will always be an origin for the resources and a destination; in other words, in any event that will be recorded, we will have debit and credit entries.T-AccountsLet's use the example from the class Accounting system.Regarding T-Accounts, it is important to highlight that they were a creation of accounting during the phase in which checking entries was made difficult by the absence of computers. Thus, T-Accounts emerged as a way to facilitate manual work, reducing errors in entries and making the construction of financial statements faster. Nowadays, with computers, posting through the Journal automatically generates the posting of T-Accounts.Because they function as an aid in accounting work, T-Accounts have a simpler structure than the Journal.Double-Entry MethodWhat we have learned has a name and is called the Double-Entry Method. This method is the basis of modern accounting. It was systematized by the Italian mathematician Luca Pacioli in the 15th century. The main idea is simple: Every financial transaction affects at least two accounts. That is: For every debit, there is a credit; The total debited will always be equal to the total credited.Trial BalanceNotice now how we can simplify the events that occurred with the company:ItemDebitCreditCash66.0000Supplies4.0000Land60.0000Suppliers04.000Loan040.000Share Capital080.000Revenue018.000Rent Expense7.0000Salary Expense5.0000Total142.000142.000Based on the table, we can see the list of accounts with the final balances, whether on the debit side or the credit side. The first purpose of the Trial Balance is to prove that there is equality between the sum of debits and the sum of credits. The double-entry method assumes that the amounts of debits are equal to the amounts of credits. If this does not occur, the accounting process was done with some error.This profit may have several destinations. One of them is to compensate the shareholders, who invested in the company. The other possibility is to retain the resources in the company for new investments. In this case, the amounts may increase Share Capital or make up Profit Reserves. In our small example, we will consider that the result for the period will become part of Profit Reserves.Exercises1) (IADES - CFM - Accounting Technician - 2018) The T-accounts shown in the image show the initial balances of the accounting accounts on 3/24/X1.Throughout the day, the following accounting events occurred.1. Payment of an invoice with a check in the amount of R$ 1,500.2. Receipt of an invoice in cash in the amount of R$ 900.3. Purchase of merchandise in the amount of R$ 5,000, with 10% of the amount paid upfront by check and the remainder to be paid in 30 days.After making the entries in the T-accounts and calculating the account balances, the account that presents the correct balance is the following:A) Cash: 16,000 credit.B) Merchandise: 38,200 debit.C) Accounts receivable: 10,400 credit.D) Bank: 19,600 debit.E) Accounts payable: 15,000 credit.2) (EEAR - Aeronautics - EAGS - Air Force Sergeant - Specialty: Administration - 2021) Evaluate the information below about T-Accounts and Trial Balance.I- Trial Balance is a list of accounts extracted from the journal.II- The sum of the Debit Balance column must be equal to the Credit Balance column.III- As many T-accounts should be used as there are accounts used in the bookkeeping of the journal.IV- To avoid mistakes, the records in the T-accounts must strictly follow the order in which the accounts are entered in the journal.The correct statements areA) I, II and III.B) I only.C) II, III and IV.D) II and III only.3) (EEAR - Aeronautics - EAGS - Air Force Sergeant - Specialty: Administration - 2019) Regarding the Trial Balance, mark T for true or F for false and then choose the alternative with the correct sequence.( ) If an account shows a debit balance in the T-account, it will be transferred to the debit balance column in the Trial Balance.( ) In the Trial Balance, the total of the credit balance column may be different from that of the debit balance column, depending on the balances of the T-accounts.( ) If an account shows a credit balance in the T-account, the debit balance will be transferred to the Trial Balance, aiming to close the respective account.A) T – T – FB) T – F – FC) F – T – TD) F – F – T4) (CESGRANRIO - ANP - Regulation Technician - Technical Area in Accounting - 2008) In the “T” Account, used in explanations and problem solving, debits are made on the left side of the vertical line and credits on the right side. The determination of the side of the T-account or “T” account to be used for increases or decreases results from theA) kind of account.B) function of the account.C) nature of the account.D) operation of the account.E) type of account.Answer Key1) E2) C3) B4) C
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