Bank Accounts - Debits And Credits

You're probably familiar with a bank account statement and seeing debit and credit entries, the confusing thing is bank statements are produced from the banks point of view so when looking at them for organisations debits and credits are actually reversed.

• A bank sees a debit as money going out of a customer's account.
• A bank sees a credit as money coming into a customer's account.

However business need to see their bank account as follows:

• A business sees money coming into the account is always a debit
• A business sees money going out of the account is always a credit

In a manual system as debits go on the left and credits on the right a good way to think of the bank is money comes in on the left (debit) side and goes out on the right (credit) side.