Notes on Debit, Credit
Asset and Liability
Definitions and Synonyms
Debit and Credit
In every transaction there are one or more debit items and one or more credit items
Debit and credit items are of three kinds (a) those relating to personal accounts, (b) those relating to accounts with cash, notes, acceptances, and other mediums of exchange, and (c) those relating to accounts with property, with uses, with services, with allowances, with expenses, and with incomes and revenues
GENERAL RULE FOR DEBITING AND CREDITING ACCOUNTS
Debit the receiver credit the giver
Debit the Receiver, what is received, and that which costs value
Credit the Giver, what is given, and that which returns value
From Bookkeeping and Accountancy Harry M. Rowe 1910
Synonyms for Debit and Credit
Debit – amount due, charge, debt, deficit, liability, obligation, pay out from, payout, payment, commitment
Credit – put on the books, charge to an account, place to the credit of, accredit to, give credit to, extend credit to, place to one’s account, defer payments
Black’s law 6th- Definitions
Credit – That which is incoming or due to one, that which is due a person as distinguished from debit, that which is due by him. Claim or cause of action for specific sum of money. Credit means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment
In accounting, a credit is a component of a journal entry which increases revenues, liabilities, and equity; and decreases assets and expenses.
Debit – A sum charged as due or owing. An entry made on the asset side of a ledger or account. The term is used in book-keeping to denote the left side of the ledger, or the charging of a person or an account with all that is supplied to or paid out for him or for the subject of the account. Also, the balance of an account where it is shown that something remains due to the party keeping account.
As a noun, an entry on the left-hand side of an account. As a verb, to make an entry on the left-hand side of an account. A term used in accounting or book-keeping which results in an increase to an asset and an expense account and a decrease to a liability, revenue, or owner’s equity account.
In summary: an increase (+) to an asset account is a debit. An increase (+) to a liability account is a credit. Conversely, a decrease (-) to an asset account is a credit. A decrease (-) to a liability account is a debit.
Assets and Liabilities
Synonyms for Asset – benefit, blessing, boon, credit, distinction, help, resource, service, treasure
Related words – resource, property
Synonyms for Liability – accounts payable, debts, expenditure, obligations – the state of being held as the cause of something that needs to be set right the liability for the accident is held by the person who was driving too fast
Definition: Assets – property of all kinds, real and personal, tangible and intangible, including inter alia, for certain purposes, patents and causes of action which belong to any person including a corporation and the estate of a decedent. The entire property of a person, association, corporation, or estate that is applicable or subject to the payment of his or her or its debts.
From Black’s Law 6th Edition
1. The property in the hands of an heir, executor, administrator or trustee, which is legally or equitably chargeable with the obligations, which such heir, executor, administrator or other trustee, is, as such, required to discharge, is called assets. The term is derived from the French word assez, enough; that is, the heir or trustee has enough property. But the property is still called assets, although there may not be enough to discharge all the obligations; and the heir, executor, &c., is chargeable in distribution as far as such property extends.
2. Assets are sometimes divided by all the old writers, into assets enter mains and assets per descent; considered as to their mode of distribution, they are legal or equitable; as to the property from which they arise, they are real or personal.
3. Assets enter maim, or assets in hand, is such property as at once comes to the executor or other trustee, for the purpose of satisfying claims against him as such. Termes de la Ley.
4. Assets per descent, is that portion of the ancestor’s estate which descends to the heir, and which is sufficient to charge him, as far as it goes, with the specialty debts of his ancestor. 2 Williams on Ex. 1011.
5. Legal assets, are such as constitute the fund for the payment of debts according to their legal priority.
6. Equitable assets, are such as can be reached only by the aid of a court of equity, and are to be divided, pari passu, among all the creditors; as when a debtor has made his property subject to his debts generally, which, without his act would not have been so subject. 1 Madd. Ch. 586; 2 Fonbl. 40 1, et seq.; Willis on Trust, 118.
7. Real assets, are such as descend to the heir, as in estate in fee simple.
8. Personal assets, are such goods and chattels to which the executor or administrator is entitled.
9. In commerce, by assets is understood all the stock in trade, cash, and all available property belonging to a merchant or company. Vide, generally, Williams on Exec. Index, h.t.; Toll. on Exec. Index, h.t.; 2 Bl. Com. 510, 511; 3 Vin. Ab. 141; 11 Vin. Ab. 239; 1 Vern. 94; 3 Ves. Jr. 117; Gordon’s Law of Decedents, Index, h.t.; Ram on Assets.
A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856 http://legal-dictionary.thefreedictionary.com/assets
Liability – A comprehensive legal term that describes the condition of being actually or potentially subject to a legal obligation.
Joint liability is an obligation for which more than one person is responsible.
Joint and several liability refers to the status of those who are responsible together as one unit as well as individually for their conduct. The person who has been harmed can institute a lawsuit and recover from any or all of the wrongdoers—but cannot receive double compensation, for instance, the full amount of recovery from each of two wrongdoers.
Primary liability is an obligation for which a person is directly responsible; it is distinguished from secondary liability which is the responsibility of another if the party directly responsible fails or refuses to satisfy his or her obligation.
From West’s Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
liability – one of the most significant words in the field of law, liability means legal responsibility for one’s acts or omissions. Failure of a person or entity to meet that responsibility leaves him/her/it open to a lawsuit for any resulting damages or a court order to perform (as in a breach of contract or violation of statute). In order to win a lawsuit the suing party (plaintiff) must prove the legal liability of the defendant if the plaintiff’s allegations are shown to be true. This requires evidence of the duty to act, the failure to fulfill that duty, and the connection (proximate cause) of that failure to some injury or harm to the plaintiff. Liability also applies to alleged criminal acts in which the defendant may be responsible for his/her acts which constitute a crime, thus making him/her subject to conviction and punishment. Example: Jack Jumpstart runs a stop sign in his car and hits Sarah Stepforth as she is crossing in the cross-walk. Jack has a duty of care to Sarah (and the public) which he breaches by his negligence, and therefore has liability for Sarah’s injuries, and gives her the right to bring a lawsuit against him. However, Jack’s father owns the automobile and he, too, may have liability to Sarah based on a statute which makes a car owner liable for any damages caused by the vehicle he owns. The father’s responsibility is based on “statutory liability” even though he personally breached no duty. A signer of promissory note has liability for money due if it is not paid, and so would a co-signer who guarantees it. A contractor who has agreed to complete a building has liability to the owner if he fails to complete on time. (See: negligence, contract, joint liability) http://legal-dictionary.thefreedictionary.com/liability