Credit turnover on a current account is an important indicator of the financial and economic activity of an enterprise. This term is widely used by accountants, auditors and bankers. However, for private entrepreneurs and novice businessmen, its content is often not entirely clear. When figuring out its meaning, you need to start from the general category.

Current account turnover: concept

(check, current or "on demand") is an account of two types of transactions performed:

• crediting funds received by recalculation or in cash from clients, counterparties or founders (debit);
• payments for raw materials or goods to suppliers; employee salaries; taxes, fees, deductions and penalties to the Federal Tax Service, Pension Fund, Social Insurance Fund (credit).

In the very general view– this is a collection of all transactions made over a certain period (day, month, quarter, half-year, year) and displayed in the bank statement. From the point of view of the owner of the account, it can be divided into two components:

• debit turnover - system of incoming transactions;

All this is simple and obvious until the client first receives in his hands, in which the payment of tax appears as a debit, and the crediting of financial assistance from the founder as a credit. In addition, based on the results of the banking day, a negative account balance is visible.

It is necessary to understand that the extract is an accounting document of the financial institution, and not the owner of the account. Since the bank has taken possession of someone else's funds, it formally becomes the client's debtor. Accordingly, the receipt of funds into the account increases its debt (bank credit), and the transfer of money outside, on the contrary, reduces it (bank debit).

The nature of credit turnover

As already mentioned, credit turnover on a current account is the totality of all expense transactions. Their list and content can be judged based on the chart of accounts. The following actions are displayed for the active account credit 51 r/s:

• receipt of money from the account to the cash desk;
• payment to suppliers for products, contractors for work;
• tax contributions to the state budget;
• repayment of loan debts;
• transfer of money to social security and insurance authorities;
• creditors;
• payment of interest on loans from credit institutions;
• financial investments.

Net figures

Cleared turnover on the current account is:

• an indicator of the financial well-being and performance of the enterprise;
• a word from accounting slang that is not used either in legislation or in contracts.

Without delving into terminology and financial intricacies, we can assume that turnover on the account is an indicator of activity, and net turnover is an indicator of the success of the enterprise. For this reason, the last category is actively used:

• auditors to analyze the work of the institution;
• banks to establish the applicant’s solvency when receiving a loan.

Account turnover is defined as the difference between receipts and expenses for the period of interest to the analyst (from one day to several years). In turn, when calculating cleared turnover, not all receipts are taken into account, but only those that are directly related to operational business activities. Not subject to accounting:

• receipts to the account of any borrowed funds: loans, financial assistance, both repayable and non-repayable;
• proceeds from the sale of shares, bills and other proprietary securities;
• return of erroneously transferred money;
• replenishment of current accounts from accounts opened by the company in other financial institutions.

Net turnover on an organization’s current account reflects its gross income and allows you to:

• produce in-depth analysis economic activity;
• compare the reported data on receipts from the sale of goods with actual revenue;
• establish the segment occupied by a business entity in a specific market.

Requirements for providing an overdraft

This indicator is important for providing an overdraft. Regarding it, most banks put forward the following requirements:

• the account is open and active for 3 or more months;
• the overdraft amount is less than or equal to 30% of the cleared average monthly debit turnover on the current account for the last 3 months;
• The financial position of the owner of the settlement is no worse than average.

Can credit turnover on a current account exceed debit turnover?

• if it is positive, it means that the debit turnover exceeded the credit turnover;
• if negative, then vice versa, but this requires a separate explanation.

The classic agreement for servicing a bank account assumes the availability of exclusively own funds. Such situation:

• similar to a deposit, with the difference that there is always access to money;
• The opposite of credit, where the client uses borrowed funds.

Thus, in its pure form it does not imply the possibility of a negative balance. If there is no money, the bank simply does not fulfill the client’s instructions to make payments and forms a certain sequence from them. Payments and other administrative papers go into the card index and are executed on the basis of the requirements of Art. 855 of the Civil Code of the Russian Federation in the following order:

• demands of bailiffs for compensation for damage to the life and health of citizens, collection of alimony;
• FSSP documents regarding the payment of wages, severance assistance to those dismissed, under copyright agreements;
• current wage, contributions to the Pension Fund, Social Insurance Fund, Employment Fund;
• taxes and fees;
• and administrative documents of the owner of the account.

To avoid such a situation, the bank and the client can agree to combine in one transaction the elements of two banking agreements: a credit agreement and a settlement agreement. In this case, an overdraft is established on the current account. In the event of a temporary lack of own funds, the company pays with credit. This is beneficial, for example, to a seller of goods who needs to pay the supplier immediately, while he will receive funds from buyers later.

In such a situation, credit turnover on the current account can significantly exceed debit turnover. As already mentioned, overdraft is limited. In addition, for the use of bank funds, the account holder pays him an agreed remuneration.

RULES FOR RECORDING IN ACCOUNTING ACCOUNTS

ACTIVE ACCOUNTS

For clarity, let’s look at an active account, which necessarily accompanies the activities of any legal entity: #51 “Current account”. This account reflects the amount of non-cash funds of a particular enterprise (in Russian rubles) that are in a bank account; any money is one of the types of property, therefore this account is active.

INCOME AND EXPENSES OPERATIONS

The above two-way table will correspond to account #51 "Current Account". An enterprise has two types of bank account transactions; expenses (withdrawal, transfer, use of funds) and income (their receipt). In accordance with the rules, incoming transactions are reflected in the debit of the active account, and expenditure transactions are reflected in the credit.

STANDARD PERIOD IN ACCOUNTING. OPENING BALANCE

(thousand rubles) 51 (A)

Debit	Credit
50000

This entry means that 50 million rubles were credited to the current account, increasing the amount of funds on it, and not anything else. Therefore, we can conclude that when active accounts are debited, they increase (it should be understood that this is not the definition of an active account, this is its property).

DEBIT TURNOVER

Similarly, all incoming transactions are reflected in the debit of the active account. Debit turnover is the total amount of all incoming transactions that are reflected in the debit of the active account. If we assume that during the same time 17 million rubles were spent from the current account to pay expenses, then this expense transaction will be recorded as a credit to the active account (A) No. 51:

(thousand rubles) 51 (A)

Debit	Credit
50000	17000

Such an entry means that 17 million rubles have been spent (written off), reducing the current account. Therefore, we can conclude that when active accounts are credited, they decrease. (this is also a property of active accounts).

CREDIT TURNOVER

All other expense transactions are reflected in the same way on the credit of the active account. Credit turnover is the sum of all expense transactions that are reflected on the credit of the active account.

OPENING BALANCE

To calculate the closing balance, that is, count the amount of funds remaining in the current account, you need to subtract from the volume of debit turnover (the volume of the total amount of funds that were received) the volume of credit turnover (the volume of the total amount of funds that were spent). If there is any opening balance on the current account, you need to add it. In the example considered, this balance is zero, so the outgoing balance is 33 million rubles. It should be recorded on the left side of the table (that is, by debit), because in our case the debit turnover is greater than the credit turnover:

(thousand rubles) 51 (A)

Debit	Credit
50000	17000
33000

It should be noted that for active accounts only debit balances are always possible because you cannot use more funds than you have in the account. Funds received during the period are also added to this. If all the funds in the account have been used, including those received, then the balance will be zero and it makes no sense to say whether it is debit or credit. If funds from the account are partially used, that is, in the case when something remains on the account, the balance will be recorded in accounting as a debit and will reflect the amount of funds in the active account.
This balance in the amount of 33 million rubles will not disappear with the beginning of a new period, but will be the opening balance of the next period, in which the recording of expense and income transactions continues to be carried out in a similar way.
The term “account balance” is often used instead of the term “account balance”, and the terms “opening balance” (“balance at the beginning of the period”) and “opening balance” (“balance at the end of the period”) instead of the terms “opening balance” and “ outgoing balance."

PASSIVE ACCOUNTS

For clarity, let’s consider passive account #86 “Reserve capital”, reflecting the amount of reserve capital created in the course of the enterprise’s activities, organized in accordance with the requirements of the enterprise’s constituent documents or legislation. The formation of reserve capital occurs, as a rule, at the expense of profit, being one of the sources of formation of the enterprise’s property, therefore it is allocated to a passive account.

Operations on passive accounts, as well as on active ones, are divided into two groups: expenditure and income (replenishment). Compared to the already described process of recording transactions on active accounts, with passive accounts the situation is exactly the opposite: expenditure transactions are reflected in the debit of passive accounts, and incoming transactions are reflected in credit. Let us assume that at the beginning of the billing period the company has not yet created reserve capital (that is, the company has a zero opening balance). Over the established period, the amount of reserve capital became equal to 20 million rubles.
This operation will be reflected in the passive account (P) No. 86 as follows:

(thousand rubles) 86 (P)

Debit	Credit
20000

Such an entry means that reserve capital has been replenished by 20 million rubles, that is, we can conclude that when passive accounts are credited, this means their increase.

CREDIT TURNOVER

All incoming transactions are reflected similarly on the credit of the passive account. Credit turnover is the total amount of incoming transactions that are reflected on the credit of the passive account. Let's assume that during the same billing period the company used reserve capital funds to cover any losses from commercial operations in the amount of 7 million rubles. This operation will be recorded in the left column of the table, that is, in the debit of the passive account:

(thousand rubles) 86 (P)

Debit	Credit
20000
7000

Such an entry means that 7 million rubles were written off (spent) from the reserve capital, reducing it, that is, we can conclude that when passive accounts are debited, this means their reduction.

DEBIT TURNOVER

Other expense transactions are reflected in the same way as a debit to the passive account. Debit turnover is the total amount of expense transactions that are reflected in the debit of the passive account. To calculate the outgoing balance of the account in question, you should subtract the debit turnover (total amount of funds spent) from the credit turnover (total amount of funds received). If there is any incoming balance on this account, you need to add it. Since in our case the incoming balance is zero, the outgoing balance is ultimately equal to 13 million rubles. Its entry is carried out on a credit basis, that is, in the right column of the table, since the debit turnover is less than the credit turnover:

(thousand rubles) 86 (P)

Debit	Credit
20000
7000
	13000

Note that passive accounts only have a credit balance, so the company cannot use more account funds than it has, taking into account those funds that were received during the billing period. If during the period all funds were used, and at the end the balance on the passive account is zero, then it makes no sense to say whether it is a debit or a credit. If the balance is different from zero (that is, not all funds in the reserve capital or any other passive account have been used), then it appears in accounting as a credit balance of the passive account, thereby reflecting the exact amount of funds in the passive account.
The closing balance, equal to 13 million rubles, does not disappear with the beginning of the next billing period, becoming the opening balance of the next period. Then the recording of expenditure and receipt transactions is carried out in a similar way, being mirror image the order of recording transactions for the active account.

ACTIVE-PASSIVE ACCOUNTS

A feature of active-passive accounts is the presence of both credit and debit balances on them, and their simultaneous presence is not excluded. Let's consider operations with active-passive accounts using the example of account #76 “Settlements with various debtors and creditors,” which is most often found in accounting for transactions with securities. This account is intended for transactions for which current instructions do not provide for separate accounts. Most transactions on the securities market are, to one degree or another, reflected in accounting using active-passive account 76 “Settlements with various debtors and creditors,” since no special accounting procedure or balance sheet form is provided for professional participants in this market.
Let's consider a situation where an enterprise acts as an investor on the securities market, and it carries out the purchase and sale of securities with the help of a brokerage office. In order to purchase securities, the company transfers funds to the broker and gives instructions that provide for the conditions for the broker to purchase securities.
Let us assume that in order to purchase a block of shares in RAO UES of Russia, the enterprise transferred 100 million rubles to a broker. After this, some time passes, necessary for the broker to complete the specified operation, so the shares of RAO UES will appear at the enterprise later (the terms are specified in the order) than the money was transferred. Thus, for some time the company has neither 100 million nor shares.
Until the broker returns 100 million rubles to the enterprise or buys shares of RAO UES of Russia for this amount, he will owe them. This will be reflected in the broker’s receivables for this amount to the company, which in turn will be reflected in the accounting records as the debit of active-passive account No. 76 (A-P):

(thousand rubles) 76 (A-P)

Debit	Credit
100000

ACCOUNTS RECEIVABLE

The receivables of the counterparty to the enterprise are always reflected in the debit of the active-passive account. After some time, the broker purchased shares of RAO UES of Russia for the enterprise, fulfilling the conditions established by the enterprise, but the purchase was not made for the entire amount, but only for a part, for example, 70 million rubles. The broker transferred this block of shares (or the corresponding extract from the register) in the amount of 70 million rubles to the enterprise. Now the broker's receivables to the company have decreased from 100 million to 30 million rubles.
We find that 70 million rubles (the cost of purchased shares) constitute credit debt. This is reflected in accounting as follows:

(thousand rubles) 76 (A-P)

Debit	Credit
100000
	70000
70000

After this, the debit balance of this account is 30,000 million rubles, which indicates that the broker has a debt to the company in the amount of 30 million rubles. Let us further assume that the broker purchased additional shares of RAO UES of Russia for the remaining 30 million, but at the same time slightly overspent, having actually spent 30.5 million on shares, that is, he used 500 thousand of his personal funds. Thus, he seemed to have financed the enterprise. After receiving the second block of shares, this operation will have an accounting reflection similar to the first:

(thousand rubles) 76 (A-P)

Debit	Credit
100000
	70000
	30500
	500

ACCOUNTS PAYABLE OF THE ENTERPRISE TO CONTRACTORS

Thus, after making such an accounting entry, account balance #76 will become a credit account (moving from the left side of the table to the right). This balance will mean accounts payable to the company's broker in the amount of 500 thousand rubles. Consequently, accounts payable to the enterprise's counterparties are always reflected in the credit of active-passive accounts.
In the future, similar transactions between the broker and the company can continue to be carried out, and the balance of the active-passive account will always show the state of the relationship between the broker and the company: who owes whom and how much

Everyone is familiar with the expression “reconcile debits with credits.” But for many it remains a mystery what these concepts mean. Therefore, in this article we will consider what debit and credit are, as well as credit and debit turnover.

Accounting Functions

With the help of accounting, an analysis of the activities of an enterprise is carried out, its property, capital, and liabilities are taken into account. You can easily understand whether a business is profitable or unprofitable. Therefore, when funds are received, material assets are written off, or settlements with suppliers occur, this is recorded in accounting in monetary terms.

The basic rule of accounting is the following: as much comes in, the same must go out. It is also called the principle of conservation of value.

What are debit and credit?

Debit and credit are concepts used in accounting to analyze all processes of an enterprise. There are many accounting accounts, all of which were created to record business transactions. Each account has its own name and number.

So, let's compare debit and credit turnover.

Debit represents all available assets that belong to the organization. That is, this is the property that the company has on this moment. Property can be understood as:

• Funds in a bank account.
• Cash held in the cash register of a business.
• The total value of goods in warehouses.
• The total value of all fixed assets owned by a company.
• Current debts of counterparties.

Accordingly, the more assets an enterprise has, the more successful it is considered. The source of formation of assets can be the authorized capital.

Debit turnover is the total amount of all incoming transactions recorded on debit. Credit turnover is the sum of all expenditure transactions reflected on the loan. At the same time, you need to understand that we're talking about about the active account. If the account is passive, then the situation is reversed. Receipt transactions are displayed by credit, expenditure transactions, respectively, by debit.

Liabilities are all of the organization's debts. These include:

• Possible debt resulting from non-payment of salaries to employees.
• The enterprise's debt to its counterparties.
• Depreciation charges.
• The debt of an enterprise to its founders or subsidiaries.

Where are debit and credit transactions used?

Accounting is carried out for each accounting account separately. Debit is reflected on the left, and credit is the column on the right. Each operation must be reflected. Some accounts are used quite frequently throughout the reporting period. The debit columns should reflect amounts that characterize each transaction separately. Accounts are conditionally divided depending on the balance: they can be active (account 51 “Current account”), passive (account 86 “Reserve capital”), as well as active-passive (account 76 “Settlements with debtors and creditors”).

If the property of the enterprise increases or claims arise, then the debit turnover increases for active and active-passive accounts. And vice versa, if property decreases, then credit turnover increases.

Business transactions on passive accounts are reflected in reverse. Basically, these accounts are used to see where the funds coming into the business came from.

Closing balance

At the end of each reporting period, it is necessary to summarize separately all debit and credit turnovers. As a result, the final balance is formed. In the event that there is a complete match in the amounts in the debit and credit turnover on the account, then the account can be closed. There are accounts that automatically have a zero balance at the end of the period. As a rule, these are the accounts to which expenses are written off.

In order to calculate the balance of funds in the current account, the volume of credit turnover (this is the amount of funds spent) is subtracted from the volume of debit turnover (the amount of funds received). The opening balance must be added. This is on active accounts.

If the account is passive, then to determine the final balance, add the credit turnover (this is the amount of funds received) and subtract the debit turnover (this is the amount of funds spent). In active-passive accounts, the debit and credit balances are determined according to analytical accounting data.

What is double entry?

The concepts of credit and debit are reflected in the so-called double entry. That is, it is assumed that each business transaction must be recorded using two accounts. It turns out that in one account the cost of the transaction goes into debit, and in the second - into credit. As a result, equilibrium should be formed. That is, the balance must converge every time. If a situation arises in which the total debit turnover does not cover the total credit turnover, then we can conclude that an accounting error was made when accounting for transactions.

The concept of turnover on an enterprise current account

One of the most important indicators of an organization’s activity is the credit turnover on the current account. This term is equally often used not only by accountants, but also by bankers and auditors. Unfortunately, private entrepreneurs and novice businessmen do not fully understand the essence of its content.

Depending on the purpose for which accounts are used, they are divided into the following types:

• Deposits, which are usually used to save or accumulate money.
• Credit institutions that are opened in order to service loans.
• Settlement accounts that are necessary for conducting business activities.
• Card-based, access to them is provided using cards that are issued to clients.

Actually, regardless of the type of account, they all display only two types of operations:

• Crediting funds - receipts from counterparties for services sold or goods performed, work performed.
• Expense of funds - withdrawal or transfer of funds when conducting business. This may include payments to suppliers, transfers of salaries to employees, taxes and deductions.

Current account turnover

The entire set of transactions made on the account for a specific time period (day, month, year), as well as reflected in the bank statement, represents the general concept of turnover on the current account. Such an account can be divided into two parts:

• Turnover is debit. It represents a set of cash receipt transactions.
• Bank credit turnover. It reflects the totality of cash expenditure transactions.

At first glance everything is obvious. However, everything is so simple only until the owner of the bank account receives a bank statement for the first time. It shows that the tax payment transaction is shown as a debit, while the receipt of funds as financial assistance from the founder is shown as a credit. Among other things, the bank statement shows a negative account balance at the end of the banking day.

It is important to remember that a bank statement is essentially an accounting document of the bank, and not of the owner of the current account. It turns out that since the bank accepts third-party funds for temporary possession, then, formally, it is the debtor of its client. And the receipt of funds into the current account, accordingly, increases the amount of his debt. But deducting funds from a bank account actually reduces the bank’s debt to its client.

The nature of credit turnover

What types of transactions can be carried out on a current account?

• Receipt of funds from the current account to the cash desk of the enterprise.
• Payments of funds made to suppliers for purchased products, or to contractors for work performed.
• Tax deductions in favor of the state budget.
• Transfers to repay loans and credits.
• Transfers of funds in favor of social protection authorities or in favor of insurance funds.
• Transfer of funds representing accrued interest for the use of loans provided.
• Investments of a financial nature.

The concept of net indicators

The cleared turnover of the current account is:

An indicator of the organization's performance, as well as an index of financial well-being.

A concept used in accounting slang. That is, it is not used in legislation and does not appear in contracts.

If you don’t delve too deeply into financial and accounting terminology, you can take it as a rule that current account turnover is an index of activity, and net turnover is an index of the organization’s success. That is why the second category is used quite often:

• auditors when analyzing the organization’s activities;
• tax authorities in order to exercise control over the timely payment of taxes;
• representatives of banks in order to establish the solvency of a potential loan recipient.

Banking transactions not subject to accounting

Actually, current account turnover can be defined as the discrepancy between the debit and credit turnover of funds and their actual expenditure for a certain period. However, it is worth noting that when calculating cleared turnover on an account, not all receipt transactions may be taken into account, but only those that are directly related to the activities of the enterprise.
Transactions that are not subject to accounting include:

• Any receipts to the current account of funds that are borrowed, that is, receipts of credit funds, any financial assistance, regardless of whether it is repayable or not.
• Income from the sale of securities. These could be bills or shares.
• Return to the owner of funds that were transferred erroneously.
• Receipts that occurred from other own accounts of the enterprise opened in other financial organizations.

Thus, from this article we learned what debit and credit are and how transactions are recorded. We also examined the concepts of debit and credit turnover for the reporting period.

Debit – the term comes from the Latin word debet with the literal meaning “he must”. The broadest meaning of debit is the debiting of funds from a client's account. In modern accounting, it represents the left side of a two-way account.

Designed to register cash accounting and any movement of cash, material assets and other assets of the company.

An increase in flow rate occurs with an increase in material resources and property of the company. A nuance: in passive accounts, credit is income, and debit is expense; For active accounts, the opposite is true: debit is income, and credit is expense. In other words, debit is intended to evaluate the funds taken into account: debit takes into account the presence of material assets at the beginning of the month, the beginning of the year and their further receipt during the next period (also month or year). In financial interpretation, debit means an amount payable or received to a legal entity or individual.

Accounts receivable, debit balance and turnover

Accounts receivable - represents the total amount of debts of a given company from other individuals and legal entities who are debtors in this situation. Active current accounts reflect the outstanding debits at the beginning of a specific period (month, year), as well as its further increase. Passive current accounts reflect the repayment of debts to creditors.

The debit balance is an assessment of the condition of the property or property rights of the company. Both are reflected on the account, representing the debit balance at a particular moment.

Debit turnover is business transactions that result in an increase in material assets, property or property rights. Debit turnover also evaluates the reduction in the company’s debt reflected in this account.

The debit balance is assessed as of a certain date, the debit turnover evaluates the process for any period of time.

The expression “reconcile debits with credits” is probably familiar to everyone. However, many do not even roughly understand what this means. Therefore, below we will try to explain as simply as possible what debit and credit are.

Why do you need accounting?

Why was accounting invented? In order to take into account the property of the enterprise, its liabilities, capital and, in general, all its activities.

Imagine if you counted goods in pieces, gasoline in liters, and money in rubles, then it’s not clear how to bring it all together? How to understand whether a company is making a profit or a loss, how much goods are left in the warehouse and how much money is in the current account?

Therefore, all operations, be it the receipt of amounts to the accounts of the enterprise, the write-off of material assets or settlements with suppliers, are recorded in accounting in monetary terms.

The basic rule of accounting is the principle of conservation of value. Its essence is that if some property “comes”, then the same amount should “go”. Or vice versa - when writing off a certain amount, you must receive something in return and record it in the receipt.

Debit and credit

What we talked about above is called the double entry principle. That is, any action in an organization must have 2 operations - incoming and outgoing.

To make it easier to keep such records, the concepts of “debit” and “credit” were introduced. Thus, each account is divided into two halves: debit is income, and expense is credit, the left and right columns of the account, respectively.

To make it clearer, imagine that you go to a store, take out 2,000 rubles from your wallet (let’s call it “Cashier”) and buy a dress. In this case, the amount leaves the credit of the “Cashier” account and goes to the debit of the “Shop” account. To reflect this in accounting, you need to take both of these accounts and write down 2,000 rubles 2 times:

Please note that the cost always leaves the account as a credit and goes into a debit. This transfer of value is called double posting.

What are debit and credit balances

To understand what a balance is, let's look again at a simple example.

So you decide to open outlet for the sale of greenhouses. It was autumn. At the same time, to make it easier for us, your organization does not yet have any money, no debts, or even the greenhouses themselves. But there is already a buyer who wants to buy three greenhouses from you for a total amount of 100,000 rubles and leave them (the greenhouses) with you for storage until spring.

• Step 1. The buyer pays you 100,000 rubles and calmly waits for spring, i.e. you have not shipped the greenhouses to him yet. Let’s make an accounting entry: since the money went from the buyer’s wallet to your cash register, we get the following double entry (our account names are conditional, of course):

• Step 2. You decide to transfer almost the entire amount received from the buyer (namely 90,000 rubles) to your account at the bank. That is, this money left your cash register (we write it as a credit), but it came to your current account (we write it as a debit). This is what the operation looks like in double entry:

• Step 3. You find a manufacturer who will supply you with greenhouses and enter into an agreement for the amount of 160,000 rubles. At the same time, you agree that this month you will transfer only half of the amount (i.e. 80,000 rubles), and pay the rest later. You transfer 80,000 rubles from your current account to the supplier. This will be reflected in accounting as follows:
• Step 4. You received greenhouses from the supplier in the amount of 160,000 rubles. This means that in the credit of the “Supplier” account we write 160,000, in the debit of the “Warehouse” account the amount will be the same:

This concludes the first month of your work and it’s time to sum up the results.

Credit and debit turnover

For the “Buyer’s Wallet” account, the credit turnover was 100,000 rubles, and the debit turnover was 0.

“Cash desk”: debit turnover - 100,000 rubles, credit - 90,000 rubles.

“Bank account”: debit turnover - 90,000 rubles, credit - 80,000 rubles.

“Supplier”: debit turnover - 80,000 rubles, credit - 160,000 rubles.

“Warehouse”: debit turnover - 160,000 rubles, credit - 0.

What is a debit balance

Now all that remains is to withdraw the balance that was obtained for all accounts. This value will be called “Total Balance”. To calculate the balance, you need to minus the smaller one from the larger turnover.

Let’s consider, for example, “Bank account”. The debit turnover is 90,000 rubles, and the credit turnover is 80,000. The first amount is larger, which means the balance is debit: 90,000–80,000 = 10,000 rubles. Let's write it down in the debit part of the account and enclose it in a red rectangle.

Now pay attention to the “Supplier” account: here the debit balance is 80,000 rubles, and the credit balance is 160,000. In this case, the balance turned out to be a credit balance: 80,000 – 160,000 = 80,000 rubles (also in the red rectangle).

We do the same with the rest of the accounts. As a result, we get the following result:

Let's look at what the balance means for each of these five accounts.

The “Buyer’s Wallet” account has a credit balance and it reminds you that in the spring you must give the buyer greenhouses in the amount of 100,000 rubles.

The balance on the “Cash” account is debit. It means that your organization has 10,000 rubles in its cash register.

The debit balance of the third account shows that you have another 10,000 rubles in your bank account.

The fourth account resulted in a credit balance, which will not let you forget that you owe the manufacturer 80,000 rubles.

Well, the last account with a debit balance says that in your warehouse there are greenhouses worth 160,000 rubles.

What's next?

You continue to work, and subsequent transactions must be reflected in the balance sheet. But first it is necessary to transfer the ending balances of the previous period to the beginning of the new one. Such balances will be called incoming balances; they must be written down in the appropriate column: debit balance - on the left, credit balance - on the right.

Let's go back to the example. You decide to transfer another 7,000 rubles from the cash register to your current account. Two accounts are involved. First, don’t forget to transfer the incoming balances along them (circled in green in the figure below), then write down the posting for 7,000 (in Ct “Cash” and in Dt “R/s”).

No further actions were taken on the accounts during this period.

At the end of the 2nd month, we first calculate the turnover, while not paying attention to the opening balance for now (the turnover is circled in blue). Then we calculate the final balance (in the red rectangle), already taking into account the opening balance. The following picture emerges:

Of course, these are rather primitive examples. In reality, in accounting, everything is much more complicated. But it is quite possible to get basic concepts of what debit, credit and balance are from this article.