Understanding lending balance

I recently encountered an accounting problem and found that I am still a little dizzy. Here is my summary.

Remember this is mainly the equation below. You can remember to "borrow from left to right, increase from left to right". Although it is relatively shanzhai, it works very well.

Assets + expenses = Liabilities + benefits + Income

"Left borrow and right loan" means adding "borrow" to the left of the equation, adding "loan" to the right, and "adding left and right subtract". It seems that the Left increase in SAP is positive, the addition on the right is negative.

Reprinted in the following article

Instance understanding lending balance

Keywords: Loan, loan, and loan must be equal

Assets = Liabilities + benefits
Assets + expenses = Liabilities + benefits + Income

Why is the loan of "assets, fees" opposite to "liabilities, income, and owner's equity" opposite to "loan?
Assets and expenses belong to fund occupation accounts. "borrow" indicates an increase, "loan" indicates a decrease, and the balance is on the borrower.
Liabilities, income, and owner equity belong to the fund source account. "loan" means adding "borrow" means reducing, and the balance is on the credit.

Borrow: Debit

Loan: Credit

The word "borrow" and "loan" is only a symbol used in the lending accounting method. It can be well understood through the economic business examples on the basis of accounting.
The enterprise has the following economic services this month:
(1) the purchase of raw materials is RMB 5,000, and the payment has not yet been paid. After this economic business occurred, raw materials increased by 5,000 Yuan. If the payment for the goods was not yet paid, accounts payable also increased by 5,000 yuan.
(2) return short-term loans with a bank deposit of 20,000 yuan. After this economic business occurred, bank deposits reduced by 20,000 yuan and short-term loans also reduced by 20,000 yuan.
(3) withdraw the accounts receivable of RMB 10,000 and deposit them into the bank. After this business occurred, the accounts receivable reduced by 10,000 yuan, and the bank deposits increased by 10,000 yuan.
(4) pay for the raw material purchased in arrears with a draft of 5,000 yuan that will expire after 10 days. After this business occurred, the amount of Bills payable increased by 5,000 yuan, and the amount of accounts payable was reduced by 5,000 yuan.
(5) With approval, 30,000 yuan of surplus public product is converted into capital. After the occurrence of this business, the real-income capital increased by 30,000 yuan, and the surplus public accumulation reduced by 30,000 yuan.
No matter what economic business happens, the left and right sides start to be balanced. Among the above five economic businesses:
Item (1) the same period of economic operations resulted in changes in assets and liabilities. The two sides increased at the same time, so the total amount of the two was equal;
Item (2) of the economy also resulted in changes in assets and liabilities. The two sides reduced the same amount at the same time, so the total amount of the two sides was still equal;
Item (3) economic operations have resulted in changes to the two asset items. One is reduced, the other is increased, and the decrease is equal to the increase. Therefore, the total assets have not changed;
Item (4) economic operations have resulted in changes to the two debt items. The amount of one increase, one decrease, and the other decrease is equal, so the total liabilities have not changed;
Item (5) economic business changes the two Owners' Equity items. The amount of one increase, one decrease, and the other decrease is equal, and the total amount of the owners' equity remains unchanged.
In an enterprise, although the economic business is complicated and diversified, the above five types are generally summed up. The changes in assets, liabilities, and owner equity caused by these five types of economic business further prove the balance between assets, liabilities and owner equity, this balance relationship is the basis for setting accounts, performing duplex accounting, and preparing the balance sheet. Understanding and understanding this balance is of great significance for correctly performing accounting and reflecting and supervising various economic operations.
Previously, it has been noted that the generation of the lending and accounting method has a wide range of impact on the accounting method system. However, from the perspective of accounting methods, its main features
Points can be summarized into the following points:
(1) The debit and debit methods use "borrow" and "loan" as the accounting symbols. "Borrow" indicates the increase of assets or the decrease of liabilities and owner equity; "loan" indicates the decrease of assets or the increase of liabilities and owner equity.
(2) the record of each economic business in the lending and accounting method is recorded in the same amount and recorded in the debit and credit of an account; or the debit of an account and the credit of several accounts; or the debit of several accounts and the credit of one account. Because "borrow" and "loan" are both accounting symbols, and the amount of both parties is equal, this forms the "borrow and loan" billing method, the billing rules of the loan must be equal.
(3) The debit/debit method does not require a fixed category for accounts. In addition to assets, liabilities, owner equity, income, expenses, and profit accounts, you can also set common accounts for assets and liabilities. The common account can be determined based on the balance. For example, the debit balance is the asset account; for example, the credit balance is the liability account. The preceding five economic services are used as examples to further illustrate the features of the lending and accounting methods as follows:
[Example 1] the purchase of raw materials is RMB 5,000, and the payment has not yet been paid. The purchase of raw materials should be recorded in the "raw materials" account, which is an asset account, and the increase should be recorded in the borrower. The unpaid payment shall be recorded in the "accounts payable" account, which is an debt account and the increase shall be credited to the account.
[Example 2] Return the short-term loan with a bank deposit of 20,000 yuan. Return short-term loans with bank deposits, and decrease both bank deposits and short-term loans. The "bank deposits" account belongs to the asset account, and the decrease should be credited to the credit; the "short-term loan" account belongs to the debt account, and the decrease should be credited to the borrower.
[Example 3] withdraw the account receivable of 10,000 yuan and deposit it into the bank. The recovery of accounts receivable should be recorded in the "accounts receivable" account. The "accounts receivable" account belongs to the asset account, and the reduction should be recorded in the credit account. The deposit to the bank shall be recorded in the "bank deposit" account, and the "bank deposit" account shall also belong to the asset account, and the increase shall be recorded in the borrower.
[Example 4] A bill of exchange of 5,000 yuan that expires 10 days later will be used to pay for the raw materials that were previously owed. The issuance of bills of exchange shall be recorded in the "notes payable" account, which is an debt account, and the increase shall be credited. The outstanding payment before payment should be recorded in the "payable" account, which is also an debt account, and the decrease should be recorded in the borrower.
[Example 5] with approval, 30,000 yuan of surplus public product is converted into capital. The decrease in the surplus public product should be recorded in the "surplus public product" account, which is an owner equity account, and the decrease should be recorded in the borrower. Capital increase should be recorded in the "paid-in capital" account, which is also an owner equity account, and the increase should be credited.
We can see from the examples of the above five types of economic business that any economic business should be registered in at least two related accounts, that is to say, the same amount is recorded in the debit and the credit of another account. This is the billing rule of the debit and accounting method "there is a loan and a loan must be equal.
Supplementary concepts
Accounting elements
Is the main component of the accounting object, used to reflect the financial status of the enterprise and determine the factors of business results. For profitable enterprises, the accounting elements in the Enterprise Accounting Standards are divided into assets, liabilities, owner equity, income, expenses and profits.
Accounting Confirmation
It refers to the process of identifying and determining whether an economic business can enter the accounting system as an accounting factor according to certain standards. Accounting Confirmation includes confirmation of accounting records and preparation of accounting statements.
Accounting Equation
It refers to the balance formula of the Relationship Between Accounting elements based on the relationship between assets and corresponding rights and interests of an enterprise. That is, asset = equity.
Because the equity can be divided into two parts: the creditor's equity: the debt and the owner's equity, the accounting equation can be written as follows: "assets = Liabilities + owner's equity" or "Owner's equity = assets-liabilities ".
The accounting equation is the theoretical basis of compound accounting and the basis for preparing the balance sheet. All economic business operations of an enterprise do not change the balance of the accounting equation. Specifically, assets and rights increase with the same amount, and total assets and rights and interests increase. assets and rights decrease with the same amount, and assets and rights decrease with the same amount, the total assets and benefits remain unchanged. The increase or decrease of the equity is equal to the increase or decrease, and the total assets and benefits remain unchanged.
Assets(Current assets/monetary funds/cash/bank deposits/Accounts Receivable/other monetary funds, etc)
It refers to the resources formed by past transactions and events and owned or controlled by the enterprise. This resource is expected to bring economic benefits to the enterprise, including various properties, creditor's rights and other rights.
Liabilities(Short-term loan/bill payable/welfare payable/advance fee/long-term debt/long-term payable)
It refers to the current obligation formed by past transactions and events. fulfillment of this obligation is expected to result in economic benefits flowing out of the enterprise.
Benefits(Owner equity/share capital accumulation fund/capital premium/Public Welfare Fund/unallocated profit)
A right that can be raised against an enterprise's assets. On the balance sheet, it corresponds to assets. Equity is divided into "creditor's rights" and "owner's rights" by nature ". Creditor's Rights and Interests, also known as "liabilities", are the right of creditors to request enterprise assets. The owner's equity, also known as the "Owner's equity", is the right that enterprise investors can request for enterprise assets.
The abbreviation of "Enterprise Owner's equity. Also known as "net benefits ". The owner's equity refers to the economic interests of the owner in the enterprise's assets. The amount is the balance after the assets minus liabilities. The owner's equity includes the paid-in capital (or share capital), capital accumulation, surplus accumulation, and unallocated profit.
Revenue
It refers to the total inflow of economic benefits formed by an enterprise in daily activities such as selling goods, providing labor services and transferring the right to use assets, including the main business income and other business income. Revenue does not include payments collected by third parties or customers.
Profit
It refers to the business results of an enterprise during a certain period of accounting, including the operating profit, total profit and net profit.