Please could you confirm whether the following is correct...
Net CREDIT balance = profit
Net DEBIT balance = loss
... or should it be the other way round?
I'm confused because I thought the above was correct, but for running balances an overall CREDIT balance is represented within brackets, which would indicate a loss?
Thanks very much.
Thanks all for your help! I find it hard to get my head around debits and credits.
Thanks to you, it's been confirmed that:
Net credit balance = profit
Net debit balance = loss
Running balances are a way of representing the accounts in the nominal ledger to make it easy to see which transactions have affected the account. Debits go on the left, credits on the right. I think I got confused and thought that because credit balances go in brackets it means they are negative (hence, a loss)... instead of thinking they are in brackets because credit balances are liabilities.
I also struggle with the concept that a net credit balance is a profit, yet credit numbers are taken as negative. Similarly, a net debit balance is a loss, yet debit balances are taken as positive.
Really appreciate your responses! Thanks!
Net CREDIT balance = profit
Net DEBIT balance = loss
... or should it be the other way round?
I'm confused because I thought the above was correct, but for running balances an overall CREDIT balance is represented within brackets, which would indicate a loss?
Thanks very much.
Thanks all for your help! I find it hard to get my head around debits and credits.
Thanks to you, it's been confirmed that:
Net credit balance = profit
Net debit balance = loss
Running balances are a way of representing the accounts in the nominal ledger to make it easy to see which transactions have affected the account. Debits go on the left, credits on the right. I think I got confused and thought that because credit balances go in brackets it means they are negative (hence, a loss)... instead of thinking they are in brackets because credit balances are liabilities.
I also struggle with the concept that a net credit balance is a profit, yet credit numbers are taken as negative. Similarly, a net debit balance is a loss, yet debit balances are taken as positive.
Really appreciate your responses! Thanks!