On Wed, 17 May 2000 07:47:54 EDT, the world broke into rejoicing as
Hendrik Boom <[EMAIL PROTECTED]> said:
> > Randolph Fritz <[EMAIL PROTECTED]> writes:
> > > Could someone tell me, please, the historical background of this odd
> > > use of language? If it's already been discussed, then please point me
> > > to the archives.
> >
> > When you make a deposit in a bank account, the bank OWES YOU money.
> > You become a "creditor" and the bank is a "debtor", just as if you had
> > loaned the bank money. Which you have.
> >
> > A "credit" is a "payment by a debtor on an amount due" by both common
> > sense and accounting practice.
> >
> > Therefore, a withdrawal of money from the bank, which reduces the
> > balance of the account and therefore the amount that the bank owes
> > you, is a "credit".
> >
> > A "debit" is etymologically a "debt", i.e. an increase in the amount
> > owed by a debtor, again in both common sense and accounting practice.
> >
> > Therefore, a deposit of money into the bank, which is an increase in
> > the balance of the account and of the amount of money that the bank
> > owes you, is a "debit".
> >
> > I had to have this explained to me a million times but now it makes
> > perfect sense and I can't even think of a withdrawal being a "debit"
> > any more (how's that? I don't owe the bank any money!)
>
> Let's see if I understand this now.
>
> Does this mean that if I overdraw my chequing account, and subsequently
> deposit $16.74 to cancel the overdraft, that the $16.74 is a credit,
> because I owed the bank money? And if I subsequently deposit $15.75 to
> make the balance positive, the $15.75 is a debit, because it establishes the
> bank's debt to me?
No.
When you deposit $16.74, it supplies _both a debit and a credit._
Debit to somewhere, and an equal and opposite credit to balance that.
The effect of both of those transactions _on the chequing account_ is
the same, that the transactions "debit chequing." (And credit something
else; perhaps a cash account, or otherwise, whatever it was that you
got the cash from.)
The thing that varies in the situation you describe is not the way of
looking at the _transactions_, but rather the way of looking at the
balance in the chequing account.
- At the start, there is a credit balance in the account; that
indicates that you owe the bank money.
- After two transactions that "debit chequing," the balance of the
chequing account will be in your favor; it will have a debit balance.
--
Babbage's Rule: "No man's cipher is worth looking at unless the
inventor has himself solved a very difficult cipher" (The Codebreakers
by Kahn, 2nd ed, pg 765)
[EMAIL PROTECTED] - <http://www.hex.net/~cbbrowne/lsf.html>
