/1 Why is a credit card called a โ๐๐ซ๐๐๐ข๐ญโ card?
Why is a debit card called a โ๐๐๐๐ข๐ญโ card?
An example of a debit card payment is shown in the diagram below. ๐
Why is a debit card called a โ๐๐๐๐ข๐ญโ card?
An example of a debit card payment is shown in the diagram below. ๐
/2
๐ธ Each transaction in the business system is transformed into at least two journal lines in the ledger system. This is called ๐๐จ๐ฎ๐๐ฅ๐-๐๐ง๐ญ๐ซ๐ฒ accounting, where every transaction must have a ๐ฌ๐จ๐ฎ๐ซ๐๐ account and a ๐ญ๐๐ซ๐ ๐๐ญ account.
๐ธ Each transaction in the business system is transformed into at least two journal lines in the ledger system. This is called ๐๐จ๐ฎ๐๐ฅ๐-๐๐ง๐ญ๐ซ๐ฒ accounting, where every transaction must have a ๐ฌ๐จ๐ฎ๐ซ๐๐ account and a ๐ญ๐๐ซ๐ ๐๐ญ account.
/3
๐ธ Each journal line is booked to an account.
๐ธ Each account belongs to one of the three components in the balance sheet:
๐กAsset = Liability + Equity
Letโs look at the issuing bankโs ledger as an example:
๐ธ Each journal line is booked to an account.
๐ธ Each account belongs to one of the three components in the balance sheet:
๐กAsset = Liability + Equity
Letโs look at the issuing bankโs ledger as an example:
/4 Bob pays $100 to the merchant with a debit card. We have two accounts involved in this transaction:
1. Journal line 1 - From the issuing bankโs point of view, Bobโs bank account is a ๐ฅ๐ข๐๐๐ข๐ฅ๐ข๐ญ๐ฒ (because the bank owes Bob money). Bobโs bank account is deducted by $100.
1. Journal line 1 - From the issuing bankโs point of view, Bobโs bank account is a ๐ฅ๐ข๐๐๐ข๐ฅ๐ข๐ญ๐ฒ (because the bank owes Bob money). Bobโs bank account is deducted by $100.
/5 This is a ๐๐๐๐ข๐ญ record.
2. Journal line 2 - Bankโs cash is an ๐๐ฌ๐ฌ๐๐ญ and the bankโs cash is deducted by $100.
This is a ๐๐ซ๐๐๐ข๐ญ record.
The balance sheet equation still balances with the two journal lines recorded in the ledger.
2. Journal line 2 - Bankโs cash is an ๐๐ฌ๐ฌ๐๐ญ and the bankโs cash is deducted by $100.
This is a ๐๐ซ๐๐๐ข๐ญ record.
The balance sheet equation still balances with the two journal lines recorded in the ledger.
/6 Bobโs card is called a โdebitโ card because it is a ๐๐๐๐ข๐ญ ๐ซ๐๐๐จ๐ซ๐ when paying with a debit card.
๐ Why is this important?
This is how a ledger system is designed, only a real ledger is more complicated.
๐ Why is this important?
This is how a ledger system is designed, only a real ledger is more complicated.
/7 Applying these strict accounting rules makes reconciliation much easier!
Why is a credit card called a โ๐๐ซ๐๐๐ข๐ญโ card?
Why is a debit card called a โ๐๐๐๐ข๐ญโ card? ๐
Why is a credit card called a โ๐๐ซ๐๐๐ข๐ญโ card?
Why is a debit card called a โ๐๐๐๐ข๐ญโ card? ๐
/8 I hope you've found this thread helpful.
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