Hi all, In the CT2-10 page 4, what basis is used to decide whether figures should be assigned to the credit column or the debit column? Thank you
Hi. As noted in page 2: the credit items consist of revenue (for the statement of profit or loss) and liabilities and capital (for the statement of financial position) - think money coming into the company the debit items consist of expenses (for the statement of profit or loss) and assets (for the statement of financial position) - think money going out of the company
Hi, how do liabilities contribute to money coming into the company? I thought these would be debit items. Also the same for assets - how are they debit items?
Don't forget the dual aspect principle. If a company gets a loan, it receives some cash (increase in assets) and it now owes money to the lender (matching increase in liabilities). An asset can be thought of as a debit item as money is debited to pay for it.
For trades payable it is written in the bracket Creditors. So this should be understood like the company has received cash from someone and is now a debtor . Since this is a liability its included in credit amount. Or the other way ? Creditors refers to the company or the one who has lent to the company ? And interest on long term loans is the interest which will be received by the company later . Am i getting all these correct ?
