Use this page to understand the usual debit and credit created by each final business action.
Sales
Action
Debit
Credit
Issue invoice
Trade Debtors 1300; Cost of Sales 5000
Revenue 4000; Output VAT 2500; Inventory 1200
Record completed customer payment
Bank 1000
Trade Debtors 1300
Settle an invoice billed in another currency
Bank 1000; Bank Charges 6030; Exchange Gain/Loss 6220 where the rand moved against you
Trade Debtors 1300 at the rate the invoice was raised at
Issue credit note
Revenue 4000; Output VAT 2500; Inventory 1200
Trade Debtors 1300; Cost of Sales 5000
Purchases and expenses
Action
Debit
Credit
Accept unlinked GRN
Inventory 1200
Trade Creditors 2000
Approve supplier invoice
Expense or Inventory; Input VAT 1550
Trade Creditors 2000
Pay supplier invoice
Trade Creditors 2000
Bank 1000
Pay a bill billed in another currency
Trade Creditors 2000 at the rate the bill was approved at; Bank Charges 6030; Exchange Gain/Loss 6220 where the rand moved against you
Bank 1000
Approve paid expense
Expense; Input VAT 1550 where claimable
Bank or creditor account
Record expense refund
Bank
Expense; Input VAT reversal where applicable
Payroll, assets and tax
Action
Debit
Credit
Finalise pay run
Salaries and Wages 6130; Employer Contributions 6135
PAYE/UIF/SDL, deductions and net salaries payable
Post depreciation
Depreciation Expense
Accumulated Depreciation
Settle VAT201 payable
VAT control or settlement account
VAT payable or Bank when paid, according to settlement workflow
Post year-end close
Closes income and expense balances
Retained Earnings 3000, with balanced closing lines
Read debits and credits in context
A debit is not always money in and a credit is not always money out. Debits usually increase assets and expenses; credits usually increase liabilities, equity and income. Always read both sides and the account type together.