Comment by lisper
2 years ago
> What would you suggest as an improvement?
Use the intuitive meaning of the words: a credit means you have money coming in, a debit means you have money going out. An increase in assets, income, or equity is a credit, and an increase in expenses or liabilities is a debit, and vice versa.
Or, alternatively, just use "credit" for any increase, and "debit" for any decrease. But this:
"Definition 6: Credit - An entry that represents money leaving an account."
is just totally backwards.
>Use the intuitive meaning of the words: a credit means you have money coming in, a debit means you have money going out. An increase in assets, income, or equity is a credit, and an increase in expenses or liabilities is a debit, and vice versa.
An increase in assets is a debit.
>Or, alternatively, just use "credit" for any increase, and "debit" for any decrease.
How is this consistent with the fact that an increase in my bank account balance is a debit?
You have completely missed the point, which is that the way in which accountants use these words is unnecessarily confusing because it does not align with the common English definitions of the words "credit" and "debit".
Yes, sorry, I was defending the established terminology without making clear why.
My problem is that your alternatives don't just change the words, they change the logic. The invariant of debit/credit is that they need to balance out.
If you choose words that can occur on both sides of the equation then this is no longer true and you're throwing out a lot more than just the admittedly unintuitive meanings of these words.
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The common English use of 'credit' and 'debit' is correct, as they ought to be since we learned them from banks.
Most people are only aware of one type of account, a liability account managed by the bank in their name.
The mistake is that we talk about them as "our" accounts.
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