Cash Account Seems Back-To-Front
Cash Account Seems Back-to-Front
On your bank statement, a deposit will be shown as a credit entry
![cb1](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb1.jpg)
However, when recording the deposit in the cash account, you’re asked to use a debit entry
![cb2](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb2.jpg)
This probably seems wrong to you
![cb3](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb3.jpg)
More than likely, you will see a deposit as a positive thing
![cb4](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb4.jpg)
So it should be shown as a credit in your records, as well
![cb5](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb5.jpg)
This sounds right, but debits & credits don’t show positive & negative values
![cb7](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb7.jpg)
Instead, they show a flow of money or value from one account to another
![cb8](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb8.jpg)
For example, if a business makes cash sales, it deposits the cash takings in the bank
![cb9.1](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb9.1.jpg)
To record this transaction, you credit the sales account to show money came from sales
![cb10.1](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb10.1.jpg)
Then you debit the cash account to show the money went to the bank
![cb11.1](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb11.1.jpg)
So, in this case, the debits & credits show that money flowed from sales to the bank
![cb12](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb12.jpg)
Debits & credits also show a flow of money in the bank’s records
![cb13](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb13.jpg)
The bank will use a credit entry to show that the money came from you
![cb15](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb15.jpg)
Then it will use a debit entry in an internal account to show where the money went
![cb16](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb16.jpg)
In this case, the debits & credits show that money came from you and went to where ever the bank put it.
![cb17](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb17.jpg)
The bank’s month-end statement is a copy of your account at the bank
![cb18](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb18.jpg)
Your account shows a deposit as a credit entry
![cb19](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb19.jpg)
So the bank statement will also show the deposit as a credit entry
![cb20](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb20.jpg)
This is in contrast to the cash account that shows the deposit as a debit
![cb21](https://seeaccountingnow.online/wp-content/uploads/2022/03/cb21.jpg)
© R.J. Hickman 2022