Generally speaking, all commerce graduates learn about debit and credit to begin with. It will explain to them that debit is what goes out, and credit is what comes in. And they know about debit and credit in detail from there. It’s though not so. Let’s know what is debit exactly and what is credit in this scenario. Suppose if you put some cash in your bank account then you’ve for yourself gone through your money debited. This means you’ve substracted what all cash or some of it, to put in the bank. Your account will say here that your money is debited and not credited because it’s your money taken by the bank.
If you take out cash from the bank to use then you’ve in exact term credited yourself. You’re using money by crediting, where your bank account also records that your money credited to you. Here, you’ll be wrong if you’ll be asked to answer what’s debit when you take out some cash from the bank? This is so because if you answer debit to the question of taking some money from the bank. You’re taking money out and crediting yourself. So, your answer should be credit and not debit. This is a bit tricky, but it helps when you know in detail with the help of few examples.
An example:
When someone sends money to you, your bank says certain amount credited to your bank account. The amount is actually taken out from the pocket of the sender. You’ll be credited with that amount when you actually take out that amount to use.
If you’ve $60,000 in your bank account, and still you’re in your back of mind would always think to own that amount not in full. So when you take out some money from that amount of $60,000 even to send an amount of $1000 to someone then it indicates that you’re credited with $1000. And that $1000 will be credited to the receiver too, once he uses it. Definitely, he will use it by taking out from the bank. This way that amount is credited to him. There’s no such debit or what you call a debit card, is actually keeps crediting you.
Giving credit to someone for a great performance, which is what this “someone” deserves, right? So taking out money from your own bank account to help yourself use it, is credit. Again when you pay the shopkeeper to buy something, then your bank account credited. You took the money and you got that “something”. Right?
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