However, what we've learned about these two words so important in the accounting world, debit and credit, have to be unlearned quickly. Why? Because in accounting, the term debit is used to describe a bank account and that money owed are actually credit accounts - the exact opposite of what we've been taught elsewhere.

In accounting terms, neither credits nor debits are 'bad', but they need to equal each other in order to balance themselves out in the end. Every itemized transaction, no matter if it's a deposit or a bill to be paid has both a debit and credit posted in the accounting world. This is what is called 'double-entry accounting' - so when you go to the bank, and the teller says, "I am crediting your account X amount of dollars," she is also debiting an entry of a similar amount without telling you this. The same goes for when the teller tells you, "I am debiting your account X amount of dollars," - the accounting will show that a credit of the same amount is being made elsewhere at the same time.

The easiest way to figure out debits and credits in accounting terms is to figure out the following: what did you receive, and where did it come from. The debit is what you received, and the credit is where you received it from, in accounting terms. So for demonstration sake, let's say you bought a CD with your credit card. The CD is what you got, so it will be a debit in the accounting world, and the credit will be applied to the liability you carry on your credit card for the exact same amount.

The bank can easily confuse people learning about credits and debits in the accounting sense of the words, especially when discussing liability. For instance, when you put money in the bank, the bank's liability to you increases, and since liabilities are credits, they are crediting your account (in accounting terms). And when the bank lowers their liability to us (by us taking money out of the bank) the banks are debiting the liability account, from an accounting perspective.

Basically it comes down to being able to figure out what you got and where exactly it came from; if you can figure these out for every transaction, then you've got the accounting terms of credit and debit down pat.

Accounting and Outsourcing - Accounting "> Accounting and Outsourcing

Business Process Outsourcing: The Competitive Advantage by Rick Click & Thomas Duening

Global competition doesn't just move jobs, it also moves business processes and creates new kinds of business cooperation. For more than a century companies with global reach had to grow into huge enterprises with massive internal infrastructure. With the rise of computer systems, smaller companies learned to share the large mainframes to lower the cost for each business. Specialized providers went into business to offer their systems and expertise so that businesses could focus on their value proposition rather than their information technology.

This outsourcing of non-core operations has expanded to many other kinds of business processes such as human resources and even some aspects of accounting. Some businesses are even creating new value propositions by combining their specialized abilities with those of another company in order for each to have a more powerful offering for their target markets. This is especially true as companies extend their reach around the globe.

Rick Click and Thomas Duening show you how this process works and what you need to do and consider so you can identify which processes you might want to outsource to lower your costs and extend your reach. While this is a practical introduction, it is meant for the general business person having to learn about BPO and having to get up to speed about what has to be done to get it right.

     

Accounting and Outsourcing - Accounting

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Accounting and Outsourcing * Accounting

Learning Accounting: Debit and Credit Basics   
Peter Lenkefi

When learning accounting for the first time, the terms 'debit' and 'credit' can be a bit confusing. Why? Because when you go to the bank and deposit money, the teller will tell you, "I am crediting your account X amount of dollars," but if you are taking money our of your account, the teller will tell you, "I am debiting your account X amount of dollars." Also, with debit machines all over the place, and credit cards in everyone's pocket, the two accounting terms take on a whole new meaning.

However, what we've learned about these two words so important in the accounting world, debit and credit, have to be unlearned quickly. Why? Because in accounting, the term debit is used to describe a bank account and that money owed are actually credit accounts - the exact opposite of what we've been taught elsewhere.

In accounting terms, neither credits nor debits are 'bad', but they need to equal each other in order to balance themselves out in the end. Every itemized transaction, no matter if it's a deposit or a bill to be paid has both a debit and credit posted in the accounting world. This is what is called 'double-entry accounting' - so when you go to the bank, and the teller says, "I am crediting your account X amount of dollars," she is also debiting an entry of a similar amount without telling you this. The same goes for when the teller tells you, "I am debiting your account X amount of dollars," - the accounting will show that a credit of the same amount is being made elsewhere at the same time.

The easiest way to figure out debits and credits in accounting terms is to figure out the following: what did you receive, and where did it come from. The debit is what you received, and the credit is where you received it from, in accounting terms. So for demonstration sake, let's say you bought a CD with your credit card. The CD is what you got, so it will be a debit in the accounting world, and the credit will be applied to the liability you carry on your credit card for the exact same amount.

The bank can easily confuse people learning about credits and debits in the accounting sense of the words, especially when discussing liability. For instance, when you put money in the bank, the bank's liability to you increases, and since liabilities are credits, they are crediting your account (in accounting terms). And when the bank lowers their liability to us (by us taking money out of the bank) the banks are debiting the liability account, from an accounting perspective.

Basically it comes down to being able to figure out what you got and where exactly it came from; if you can figure these out for every transaction, then you've got the accounting terms of credit and debit down pat.

Article to continue below----------------------------------------------

Tax Season Brings Out The Fraud Artists (ABC News)
Tax season is a popular time for identity-theft scams. Identity theft - Theft - Crime - Fraud - Law

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Article to continue below----------------------------------------------

New York Mayor Bloomberg Presses For Tax On Soda (Reuters Via Yahoo! News)
New York City Mayor Michael Bloomberg urged state legislators to levy a tax on soda, saying the money raised would help plug the state's shortfalls in health care and education funding.

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Index of Articles about Accounting and Outsourcing

What Other Authors say about Accounting and Outsourcing

Hiring a small business accounting firm is a good idea by Alvis Brazma

Every business needs an accountant who can keep the financial records intact without any problem. However, the problem arises when a company is unable to decide on whom to rely upon for hiring the accounting...

Using the Quicken Calculator by Stephen L. Nelson

Quicken includes a simple pop-up calculator. You can start the calculator by choosing the Finance menu's Calculator. Quicken starts the calculator and displays it on top of the Quicken program windowBasic...

An Introduction to Quicken Software by Bei M.

<p>When you say 'quick' you are commanding a rush and faster action. Thus, when you 'quicken' your computer, it may also mean you are making your financial uses and transactions using the computer...

Lead the corporate world with accounting help by Alvis Brazma

Do the tax sessions pester you a lot just because your organization is not having a good financial management system? As accounts are the information sheets that are needed on daily basis in order to conduct...

Accounting Logos - Salient Features of Accounting Logo Design by Jehanzaib Hassan

There is a lot of consideration when being burdened with the complex tasks of creating and designing a logo, which not only reflects the image of the company, but will catch the attention of the consumer...

Importance of Accounting Records and Companys Accounts For Business by Terry Cartwright

<p>Importance of Accounting- A Helping Hand in Outsourcing Business<p>In this growing age of money oriented society one generally opts for becoming an entrepreneur rather than slogging for...

Business Accounting Programs Whats The Right Choice For Your Business by I Henman

There was a time when small businesses could run their operations with little to no book keeping or accounting practices. But with more and more people leaving their 9 - 5 job and opting to take their...