Debit & Credit.( Basic Doubt)

[Former Member]

Hi All......

Please can anyone explain the sequence of steps how the Accounts are credited and debited when the GR & the IR is Posted.

Can anyone also say me in what way the Debit and Credit Concepts has be looked on( When Inventory its different from the Invoice ) ....Please any one calrify the entire debit/Credit Concept. Ex wud be really helpful.

Regards

Balaji

[Former Member]

Hi

When you do a GR for a stock material then the acconting movements will be

Debit : Stock account

Credit: GR/IR account

During invoice recipet the accounting movements are

Credit: Vendor account

Debit: GR/IR account

Here if any price difference is there then the difference will be posted to price difference account provided that the material is maintained at standard price.

IF the material is maintained at moving average price then the price difference will be posted to Stock account provided stock exists,otherwise the difference will be posted to price difference account

If you are receivinbg a material for consumption the accounting movements will be

Debit: Consumption account

Credit:GR/IR account

During invoice reciept of the same accounting documents will be

Credit:Vendor account

Debit:GR/IR account

[former_member227232]

Hi Balaji,

Just wanted to take you through the different places where credits & debits plays.

Debits and Credits in Relation to Accounts

Debits and credits don’t mean the same thing for every type of account. Here’s what happens when you debit or credit assets, liabilities, owner’s equity, income, and expense accounts:

Assets – Debits increase, and credits decrease asset accounts.

Liabilities – Debits decrease and credits increase a liability account (think about credit cards – when the credit limit is increased, the cardholder’s debt to the credit card company increases).

Owner’s Equity – Debits increase, and credits decrease owner’s equity.

Income – Debits decrease and credits increase income.

Expenses – Debits increase and credits decrease expenses.

So using the salary payment example above, there would be a $1000 credit decreasing the company’s assets, but at the same time, there would be a $1000 debit to the liabilities account, decreasing the total amount owed by the company, causing a balance of debits and credits in the account.

Hope this funda helps.Reward if found useful.

Regards,

[Former Member]

Hi Shyam & Srini..

Thanks for the quick reply...

Can you please take me an example....and can u say me till Vendor Payment which are all the accounts credited & Debited and Can you show me the accounts balanced.

This is what i understood ..please can u make me clear

GR--

Debit --- So when i recieve the GR u say Stock Account is debited.( Debited in the sense its Value or Qty) Since we recieve GR Stock is increased & we are liable to vendor. Here which one is captured, since its Accounting Doc value is captured & how can i look for the Qty.

Credit --- Now in GRIR account the value gets increased or decreased.

Can you please match this with a day to day scenario..

Credit Card & Debit Card in Banks ( which seem to be little opposite)...

I want to know from whose perspective i have to look at all these accounts....

Sorry for the trouble...really got confused

Regards

Balaji

[Former Member]

Hi Vengata ..

Ur right these are the reasons i get confused when i look at the accounts credits and debits. With the below example u mentioned here...

So using the salary payment example above, there would be a $1000 credit decreasing the company’s assets, but at the same time, there would be a $1000 debit to the liabilities account, decreasing the total amount owed by the company, causing a balance of debits and credits in the account.

Can u show me how the example is balance finally....

Debit is & Credit is ( -) its Std ..am i right ???

Thanks for ur awesome reply ...I will award points for sure

Regards

Balaji

[former_member227232]

Hi Balaji,

You are right.

The place matters for the debit & credit.

Regards,

Vengat

[Former Member]

Hi Shyam...

Can you also please say me how are the Credit & Debit affects incase of

Good Issue and Transfer Posting.

Regards

Balaji

[Former Member]

hi,

follow this link:

http://help.sap.com/saphelp_erp2005/helpdata/en/90/740d3a94eb632ae10000000a11402f/frameset.htm

debit is the stock account, and credit is the GR/IR clearing account.

hope this may help you,

Regards,

Srinivas