How is Building A/c debited? and Machinery A/c credited?
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Our deposits in the bank is a LIABILITY for the banks, who are liable to pay back in future, besides the payments of ineterest annually.
Thus, any money deposited is a credit for the bank as their liability increases, whereas all the loans and moneys withdrawn are debited because loans create an asset and withdrawals ease up their liability.
So even if we receive money, it is “debited” for us as it is our asset, but for the bank it is CREDIT. Whenever you read it is credited, it is for the bank’s books of accounts and not ours.
Analogously applied to “debit” for banks and credit for us!
Thus, any money deposited is a credit for the bank as their liability increases, whereas all the loans and moneys withdrawn are debited because loans create an asset and withdrawals ease up their liability.
So even if we receive money, it is “debited” for us as it is our asset, but for the bank it is CREDIT. Whenever you read it is credited, it is for the bank’s books of accounts and not ours.
Analogously applied to “debit” for banks and credit for us!
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because the money to be used for building is spent on Machinery
in short debit what comes in credit what goes out
in short debit what comes in credit what goes out
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