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info regarding journal entries [message #197605] Thu, 12 October 2006 00:42 Go to next message
Arun1203
Messages: 78
Registered: September 2006
Location: Gaborone,Botswana
Member

Dear Members,
Iam working as Apps Technical Consultant.Iam upgrading my self as Functional Consultant.
I have a doubt in journal entry.
When iam entering journals through Enter Journals Window,why I need to balance the debit and credit amounts?When they are not equal it is giving a message the "your credit and debit amounts are not equal ,do you want to save it still".Can any one please help me by explaining what is the concept behind it?
Thanks,
Arun.
icon7.gif  Re: info regarding journal entries [message #197624 is a reply to message #197605] Thu, 12 October 2006 01:45 Go to previous messageGo to next message
vin_odks
Messages: 153
Registered: July 2006
Location: -
Senior Member
Arun,

Concept is simple..

Debit should always match Credit!!!

Welcome to the world of Basic Accounting!!!!


Regards
Vinod
Re: info regarding journal entries [message #197627 is a reply to message #197605] Thu, 12 October 2006 01:52 Go to previous messageGo to next message
sujatha_mu
Messages: 55
Registered: October 2006
Location: pune
Member
Hi Arun,

one of the basic concepts of accountancy is that
every debit has a corresponding credit or vice versa

following this rule when u debit a particular amount to an account , the same amount gets credited to some other account.

If your debits and credits does not equal your trail balance will not get tallied.

Incase if u have enabled suspense account for your organization
the difference between ur total debits and total credits gets posted to suspense account.

There can be a scenario where u have journal with debit or credit balance like incase of budget journals.

Regards
Sujatha

Re: info regarding journal entries [message #197678 is a reply to message #197605] Thu, 12 October 2006 05:05 Go to previous messageGo to next message
David.K.Dickson
Messages: 413
Registered: October 2005
Location: Surrey, England
Senior Member
As Sujatha said, one of the basic concepts of accountancy is that every debit has a corresponding credit and vice versa.

For example, suppose that you have a pocketful of cash and no food. You can increase the amount of food you have, but only by decreasing the amount of cash you have. Sure, you could steal the food, but that would break the law and you would risk a fine, imprisonment or some even worse punishment.

So, supposing that you spend 0.50 buying some food, the accounting would be:

           Dr.    Cr.
Dr. Food 0.50
Cr. Cash        0.50

Sure, you could Debit the Food and not Credit the Cash, but that would break the laws of Accounting and you would risk not being able to complete your accounts, and being fired for not being competent.

I think that you might want to talk to one of your accounting users and see if they can recommend a good book on the basics of accounting, if you want to become a Financials Functional Consultant.

Cool HTH

David
Re: info regarding journal entries [message #197686 is a reply to message #197678] Thu, 12 October 2006 05:20 Go to previous messageGo to next message
sujatha_mu
Messages: 55
Registered: October 2006
Location: pune
Member
Hi David,

Ur explanation was simply superb.
I truly appeciate the logical thinking you have applied to the subject and the way explained it.
well done.



regards
sujatha



Re: info regarding journal entries [message #197724 is a reply to message #197605] Thu, 12 October 2006 07:34 Go to previous message
Arun1203
Messages: 78
Registered: September 2006
Location: Gaborone,Botswana
Member

Dear Members,
Thanks a lot for your valuable answers.
I'm very new to accounting field and I've Engg background.
But your reply was so clear ,that anyone can understand it well.
Thanks a lot once again...

Arun.
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