# CanadaUnderstanding Debiting and Crediting in Journals

#### EDed

I'm trying to understand journalizing in Accounting. And I've given an example journal entry as such:
Where the company: follows an accrual accounting system. It has an effective rate of 40% for income tax which is accrued monthly but paid annually at the end of year.

July 1: Purchased a packaged set of computer systems for \$18,000 to be used
in future consulting jobs.
The package has a useful life of three years and no residual value.

The July 1 journal entry to record the purchase of computer systems will include a:

The answer I'm given is :

Debit of \$18,000 to Computers

What I don't understand is, how would I know it's debit, and not a credit here? I know debiting means left, credit right. As well as Debiting increases assets, decreases liabilities, etc. But why in this case, are we debiting 18,000, instead of crediting that amount?

Is it because Computers are an asset, so we have to debit it (Assets are increased with debits)? I'm quite confused.
If my logic is correct there, then it seems to make even less sense here, where I have:

July 20: Paid employees \$7,500 for the first half of July. A payment of the same amount but for the second half will be made on August 5.

And the answer being: Debit of \$7,500 to Employee expense
Once again I don't understand why we're debiting here, aren't we paying an expense out, so the asset account is increased for paying an expense?(This doesn't seem to make a lot of sense to me).

Any help would be greatly appreciated!!

#### Fidget

VIP Member
ok, remember this and you won't go far wrong:

* Always DEBIT the account that receives goods, services or money.
* Always CREDIT the account that gives goods, services or money.

And always remember that for every debit, there is a corresponding credit. If you're only given one side of it, all you have to do is consider if the side of it given points to an account receiving or an account giving.

* Computers - it's a debit to the computers account. Why? Because that's the account that received. The corresponding credit entry would either be to the Supplier account (if goods purchased on credit), or to the bank account if paid in cash because that's the accounts that gave the computers or cash.

* Employee expenses: it's a debit to the employee expense account. Why? Because that's the account that received. The corresponding credit will be the bank account because that's the account that gave the money.

Hope this helps. Gives a shout if you need further explanation.

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