When it comes to borrowing, many students have a headache and don't know how to start. This article summarizes the content of relevant loan accounting with simple and easy-to-understand life stories, I hope it will be helpful to you.
When it comes to "borrowing and crediting" bookkeeping, many students have a headache and find it very difficult, so today I will try to use simple and easy-to-understand life stories to give you a painless tutorial on loan and bookkeeping.
If you find it too verbose, just look at the formula summarized at the end.
1. Where did all the money go?
The protagonist of our story is a "Xiaogang" classmate who has just entered the workplace, he works as an Internet product manager in a big city, and his monthly salary is 10,000 yuan after tax. This salary is not high in big cities, so he is also very economical, and often looks at the income and expenditure through "WeChat bookkeeping".
Figure 1: Registration of income and expenditure incursions of accounting software
Even so, Xiaogang will still find that he often owes money on Huabei and credit cards, and now there are many bank cards, and sometimes the accounting software will cause overspending if it can't be counted, so Xiaogang often complains that "I don't know where the money is spent".
As we can see from the picture above, the bookkeeping software can only record how much money he spent and what he bought, but it does not tell him which account the money was spent from. Because if it is spent from a bank card, it is a bank deposit by Xiaogang, and if it is spent from a credit card, then Xiaogang is in debt.
This is the reason why companies generally use re-examination bookkeeping, which not only records "where the money came from, but also what was gained, and always maintains a balance between the two accounts, so that the ins and outs of the funds can be traced". Therefore, re-examination bookkeeping is known as the common language of accounting and is an indispensable part of financial management.
In order to have a comprehensive understanding of the accounting situation, Xiao Gang began to note where the money came from at the back of each expense, and then regularly translated these consumption records into the accounting language of re-examination and bookkeeping.
He put together some of the main income and expenditure for the month as follows:
1) Buying clothes: expenditure, 200 yuan/pen, swipe the debit card
2) Buy a mobile phone: expenditure, 2000 yuan / pen, credit card
3) Parents sponsor to buy a computer: expenditure, 8,000 yuan/transaction, parents sponsor
4) Transportation: expenditure, 4 yuan/transaction, Alipay balance
5) Salary income: income, 10,000 yuan/transaction, debit card
6) Pay back credit card: expenditure, 2000 yuan, credit card
Let's take a look at how Xiaogang's daily consumption is converted into accounting language.
Xiaogang bought a piece of clothing, swiped a bank debit card, and spent 200 yuan.
- Where does the money come from: assets (debit cards), -200 yuan
- What got it: Assets (clothes), +200
Then translate him into accounting language:
In terms of accounting language, the bank card and clothes are assets belonging to Xiaogang, and the bank card is missing 200 yuan in exchange for a piece of clothing worth 200. They all increase and decrease on the same side;
At this time, you may have questions about how assets, liabilities, and owners' equity match Xiaogang's daily consumption. Without any hurry, let's introduce the accounting equation and accounting elements.
2. Accounting equations and accounting elements
The accounting equation is the formula for double-entry bookkeeping, and we used the first equation accounting equation in the case of buying clothes since childhood.
Figure 2: Accounting First Equation and Lending Rules
We see that there are "assets, liabilities, and owners' equity" in the accounting equation, which is called the accounting element, which is the classification of all economic activities. In the equation, assets are on the left side of the equation, liabilities and owners' equity are on the right side of the equation, and the direction of increase or decrease of each accounting element is fixed, the increase in assets must be on the debit side, and the increase in liabilities and owners' equity must be on the credit side.
Let's continue to translate Xiaogang's daily expenses into accounting language.
1) Buy a mobile phone: Swipe the credit card, spend 2,000 yuan
- Where does the money come from: debt (credit card), +2000 yuan
- What got it: Assets (mobile phones), +2000
In the accounting language, you will find that the credit card you swipe, what actually increases is Xiaogang's liabilities, and he needs to use his own assets to repay them in the future.
2) Parents sponsored to buy computers: Parents sponsored, spending 8,000 yuan
Parental Sponsorship:
- Where does the money come from: Owner's equity (parental sponsorship), +8000 yuan
- What was obtained: parents transferred to a bank card, assets (bank cards), +8000
Swipe your card to buy a computer:
- Where does the money come from: assets (bank cards), -8000
- What was obtained: assets (computer), 8000
In the accounting language, you will find that when the money sponsored by the parents is transferred to Xiao Gang's bank card, his bank card assets and owner's equity increase at the same time, because they are still balanced on both sides of the equation.
Although his parents' money does not need to be repaid by Xiao Gang many times, he will also have the obligation to support his parents in the future. (In corporate accounting, these are the dividends that the company needs to distribute to shareholders in the future)
3) Transportation: Scan the code to pay for Yuebao, and spend 4 yuan
- Where does the money come from: Assets (Yue Bao), +4.0 yuan
- What got: fee (to the company), +4.0 yuan
Transportation is not an asset, but an expense, which is necessary to ensure the normal work and life of Xiaogang. Meals are also an expense. (In the enterprise scenario, expenses are not included in shareholder dividends, and shareholder dividends can only participate in the distribution after deducting expenses)
2.1 Accounting Elements
Figure 3: 6 Elements of Accounting
We have seen that assets and liabilities are accounting elements in the previous accounting equation, and the purpose of accounting elements is to be able to classify economic activities and businesses, from small personal ledgers to large economic transactions of enterprises, so that all economic operations can maintain two-way bookkeeping and equality in the accounting equation. The accounting elements are mainly divided into 6 categories, and we will take a look at their roles from the perspective of Xiaogang students one by one.
2.1.1 Sources of money and period-end bills
Assets, liabilities and owners' equity, from Xiao Gang's point of view, represent the source of his money and the obligations to be assumed. 1) Assets
It is the money and valuable things in Xiaogang's hands, including bank cards, cash on the account, household appliances, game products, etc., as well as the money he lent to his friends are also his assets.
2) Liabilities
These are the debts that Xiao Gang borrowed, and he needs to repay them with his future income.
3) Owner's equity
Here is the feeding of Xiaogang's parents, as well as Xiaogang's gift money for honoring his parents during the New Year's holidays. (In the case of a company, these are the investments of shareholders and the dividends from future profits.)
Since this money will change with Xiao Gang's daily consumption, Xiao Gang needs to check how much money he has in his account, how much he owes on his credit card, whether his parents have fed him, etc. at the end of each month or when the bank issues a bill.
2.1.2 Daily changes in income and expenditure
In order to make it easier to see how much money is spent on a daily basis, there are three elements "income, expenses, and profits", which are the amounts incurred that record our daily income and expenses. From Xiao Gang's point of view, these three elements are his daily expenses.
1) Income: salary income, part-time income, etc.;
2) Expenses: catering, bus, telephone, electricity, Internet fees, etc.;
3) Profit: Xiaogang's real disposable income;
These three accounting elements only record the amount that occurred during a period of time, regardless of whether you have money in your account or owe money, so it is suitable for daily observation of money flows. Therefore, our bookkeeping software adopts this simple and easy-to-understand way to show.
2.2 Accounting Equations
What is the accounting equation for income and expenses? Is there a formula that is suitable for keeping track of what is happening at all times and keeping it equal? Of course, there is, and we will introduce them one by one.
Figure 4: Accounting Three Equations
There are three equations in accounting, which are called "static equations, dynamic equations, and identities".
1) Tranquility equation:
It is only true at the end of the period, and these three elements change frequently in daily life, so they are not equal in normal times. The three are equal after the financial accounting at the end of the period.
2) Dynamic Equation:
The dynamic equation records the amount of money incurred in real time, which is not affected by historical balances and is therefore always equal, and this equation is a visual reflection of the flow of funds.
3) Accounting Identity:
The six elements are always equal, which is the accounting identity. Since profits are ultimately reported and distributed to shareholders in accounting, they are attributable to the owners' equity. By merging we get the accounting identity, which is equal in any case.
3. Accounts and accounts
Upon learning this, Xiao Gang raised a question
Xiao Gang: "After learning the accounting elements and accounting formulas, I know that the debit card assets have decreased and the credit card liabilities have increased, but we are not learning to borrow and write, so whether the debit side increases or the credit side increases."
In fact, borrowing is just a bookkeeping symbol, and it must be combined with accounts and accounts to decide whether to increase or decrease.
3.1 Ledger Accounts
Figure 5: Accounting Elements and Accounts of a Business
You can think of the accounting subjects as a detailed classification of all economic activities, which are uniformly compiled and issued by the Ministry of Finance. Accounting subjects can be classified at multiple levels, and the Ministry of Finance issues a first-level classification, also known as general classification subjects.
Enterprises will further refine the second, third and even more subdivided subjects according to their own business characteristics. It is also called a detailed ledger account.
As you can see from the figure above, the accounting elements of the "static equation" and the ledger accounts are directly corresponding. What is more special is the accounting account in the "dynamic equation", which is divided into profit and loss and cost class.
1) Profit and loss
The profit and loss category is divided into "expense account" and "income account", and the purpose of combining the two together is to facilitate the calculation of profits.
2) Cost class
Cost accounts are listed separately from expense classes, and the purpose of this is also to facilitate separate cost accounting.
3.2 Accounting Accounts
Accounting account can be understood as a small ledger of accounting accounts, which is used to record the changes in the accounts of each account. Accounting accounts are called "T-accounts" or "T-accounts" according to their structure.
Figure 6: Accounting Accounts and Deposit Journals
The information that needs to be included in the accounting account is as follows:
1) Account name: The account name is the account account.
2) Direction of borrowing: The account is fixed with the debit on the left and the credit on the right. The increase or decrease of borrowing and borrowing is determined by accounting accounts.
3) Amount details: It is to record the amount of each account detail under the current account, and the amount details include the increase and decrease of the current period.
4) Occurrence amount: The occurrence amount is divided into debit occurrence amount and credit occurrence amount, which is a summary amount of the amount breakdown.
5) Account Balance:
Account balances are divided into, opening balances and closing balances. Account balances are divided into debits and credits according to the different accounts.
Balance calculation formula: Closing Balance = Opening Balance + (Debit Amount - Credit Amount)
According to standard accounting theory, the accounts of the static equation have accounts and balances (assets, liabilities, owners' equity), while the accounts of the dynamic equation have no balances (expenses, costs, revenues) because the closing balances of these accounts are to be cleared to the owner's equity.
6) Other rules: The account should also record the date of occurrence, record the summary of the accounting, and the voucher number of the accounting.
3.3 Debit and debit accounting
Xiao Gang: "It's so complicated, there are so many subjects and accounts, I can't remember it in my brain, is there a way to remember it?"
Of course, as long as we keep the following two points in mind, the rest of the content can actually be deduced.
1) The "three amounts" of the left debit side are increased, and the "three amounts" of the right credit side are increased
Specify whether the account is on the left or right side of the equation, with the debit amount, occurrence amount, and balance increase on the left side and the credit amount, occurrence amount, and balance increase on the right side.
2) There must be a loan, and the loan must be equal
Each accounting record must be registered in strict accordance with the principle of "there must be a loan, and the loan must be equal".
This means that "each transaction must be registered between two or more accounts, and the amount in the debit account must be equal to the amount in the credit account"
Figure 7: Accounting Identity Bookkeeping Rules (Enterprise Category)
In the figure above, we make a correspondence between the identity, the account and the lending rules, and let Xiao Gang increase the lending mark according to his previous daily consumption to see if the lower equation is balanced.
1) Buy clothes: 200 yuan / pen, swipe the debit card
Debit card purchases and clothes are both assets of Xiao Gang, so they are on the left side of the equation;
For asset accounts, credit card swiping is a decrease in assets, and buying a piece of clothing is an increase in assets, so it is debited.
One increases and one decreases on the same side of the equation, and the equation is balanced.
2) Buy a mobile phone: 2000 yuan/pen, credit card
When you buy a mobile phone with a credit card, the credit card belongs to Xiaogang's liability, which is on the right side of the equation, and the mobile phone you buy is Xiaogang's asset on the left side of the equation;
Liabilities account is credited because the credit card liabilities increase, and the increase in the assets of mobile phones is debited.
Both sides of the equation increase at the same time, and the equation is balanced.
3) Parents sponsor to buy a computer: 8000 yuan/transaction, parents sponsor
There are two steps to parental sponsorship, the first step is for parents to make money, the second step is for Xiaogang to spend, and the first step is for parents to transfer money to Xiaogang's debit card
If the parents agree to sponsor, the ownership equity of Xiaogang will increase by 8,000 and be credited, and the parents will transfer to Xiaogang's debit card, and the assets will increase by 8,000 and debited. Step 2: Xiaogang swiped the card to buy a computer
Xiao Gang's consumption assets decreased by 8,000 yuan, which was credited, and Xiao Gang obtained a computer, and the increase in assets was debited.
4) Transportation: 4 yuan / transaction, Alipay balance
Transportation is a cost, and the cost to the company on the left side of the equation is 4 yuan, so the debit increases;
Scan the code to pay for the money spent on Yue Bao, the asset is on the left side of the equation, and the asset is reduced by 4 yuan, so the credit is reduced;
5) Salary income: 10,000 yuan/transaction, debit card
The happiest day of the month is here, and the salary is paid. Xiao Gang actually received 10,000 yuan after deducting the provident fund and income tax, and the company transferred the money to Xiao Gang's salary card.
Pay the salary to the card, the asset is on the left side of the equation, the deposit increases by 10,000 yuan, so the debit increases by 10,000 yuan;
The salary belongs to income, and the income is on the right side of the equation, and the income increases by 10,000 yuan, so the credit increases by 10,000 yuan;
6) Credit card repayment: 2000 yuan/transaction, credit card
Debit cards belong to assets on the left side of the equation, and credit cards are liabilities on the right side of the equation.
Debit card payment, asset reduction of 2,000 yuan, debit, credit card repayment, debt reduction, credit;
Both sides of the equation are subtracted together, and the equation is balanced.
Fourth, the summary of loan bookkeeping
See congratulations, you have mastered the basic principles of credit and debit bookkeeping rules, today is a bit much, in fact, you only need to remember the following diagram and two rules, the rest of the content as long as you find the chart of accounts, combined with the scene diligent practice can be smoothly deduced.
Figure 1: Accounting rules for corporate loans
This means that "each account must be recorded between two or more accounts, and the amount in the debit account must be equal to the amount in the credit account".
It should be noted that the content of loan accounting we introduced today is mainly applicable to enterprises, and the content of financial enterprises will be introduced in the next article.
Author: Brother Gang, public account: Brother Gang's vernacular
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