Please explaoin "credit" and "debit" an account.?

1. if I take money of my checking account. I debited my account?
2. if bank added money to my checking account. They credited my account?
3. if I bought something on my credit card. The store debited my account?
4. if the store gave me refund on my credit card. The store credited my account?

Best Answer:

Sara: Your confusion is understandable for someone who is not an accountant. Those terms 'debit' and 'credit' (from your first 2 examples, at least) are relative to the BANK'S POINT OF VIEW not yours. I'll explain. The bank has a balance sheets with assets on the left and liabilities (things that it owes) on the right. Assets must always equal Liabilities Owner Equity (equity won't be explained here). On the asset side, when a bank gains an asset, it receives a credit and when it loses an asset it receives a debit. The reverse is true for liabilities. When a bank gains a liability, it receives a debit, but it is credited when loses a liability. When you take money out of your checking account, the bank loses assets and therefore records a DEBIT (remember, a loss of assets is a 'debit' on the asset side). When you add money to your checking account, the bank gains assets, which is a CREDIT on the asset side. When you use a credit card, the store DEBITS your account because you have gained a liability, a promise to pay (remember, a liability goes UP when it is debited). When you get a refund, your account is CREDITED because you have lost a liability (you are no longer obligated to pay that debt). remember, a CREDIT on the liability side means that liabilities go DOWN! So 'debit' and 'credit' don't mean 'down and up', it just refers to what action(s) is being taken and on what side of the balance sheet the action is taking place.

Other answer:

Sara:
Yes. The difference is with a checking account any money you spend with check, debit, or e-payment is (or should be) money you already have.

But with a credit card the debit when spending is credit extended to you that you have to pay back (with interest if not paid in full). If you get a refund for something you already paid the credit card bill for, you get a credit that shows as a negative balance due, if you have not already used that to buy something else.

Rhythm of the Falling Rain:
Debits increase asset or expense accounts and decrease liability or equity. Credits do the opposite — decrease assets and expenses and increase liability and equity. To make sense of this, take a look at the basic accounting equation, which is Assets = Equity + Liabilities. (http://www.wikihow.com/Understand-Debits…
1. YOU reduced your money with the bank, so it is a CREDIT.
2.THEY (you mean the BANK) CREDITED your account. Why credit? Because bank deposits of clients are liabilities of the bank.
3.The STORE debited your account because to the store the sales on account is a RECEIVABLE which is an asset to them.
4. If the Store gives you refund for account sales such as in #3 above, their Receivable is reduced so CREDITED.
coraann:
Stop at # 3. If you bought an item with your credit card, the store CHARGED the
amount to your credit card. You will receive a bill to pay it later.
All other statements are correct.
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Cha:
Thanks

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