Crediting and Debiting Accounts

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If a Credit is issued in Recreation Management, we would debit the money out of a Revenue Account (which nets that revenue account at $0 between the purchase and the credit) and credit those funds to a Liability Account. Then, if that credit gets used, the money gets debited out of the Liability Account (which nets the Liability Account at $0) and credited towards a new Revenue Account.

Example of Sequence

Entries for a hypothetical sequence involving $100:

  • Original Purchase

    • Debit Cash: $100

    • Credit Original Revenue Account: $100

    • Debit Original Revenue Account: $100

      Note: Original Revenue Net is back to $0

    • Credit "Account Credit" Liability Account: $100

  • New Purchase

    • Debit "Account Credit" Liability Account: $100

      Note: Liability Account is back to $0

    • Credit New Revenue Account: $100

  • Changes on each account after all of this is:

    • Cash: $100

    • Original Revenue: $0

    • Account Credit: $0

    • New Revenue: $100

    • Note: No double revenue recording