Debits to the windows, credits to the door

For those of you unfamiliar with double entry accounting, this saying might have little meaning, writes Brian Harford. To those of you with some bookkeeping experience you may remember this is the rule indicating that debits go to the left side and credits go to the right side of the ‘T’ account. The rule was based on being seated in a room with windows on the left side of the room and a door on the right side of the room.

This story is set in the days before computers, when bookkeepers had to do everything manually on paper:

A man who worked in the Accounting Department of a large company was famous for never, ever making a mistake. His ledgers always balanced to the penny and he never had to make any adjusting entries to correct anything. All of his co-workers noticed that he had a peculiar routine to start his day. Every day he would come into work, sit down and open the drawer to his desk. He would look inside for a few seconds, nod his head and then get to work. He was the perfect bookkeeper for over 40 years until the day finally came when he retired from the company. They gave him a gold watch, patted him on the back and walked him out the door. As soon as the door slammed shut behind him the other bookkeepers raced over to his desk to see what was inside. They found a note taped to the bottom of the drawer that read: “Remember, debits go on the left – to the window.”

For over 20 years I taught Bookkeeping & Accounts at the (then) Guildhall University in Moorgate (London) and privately on a one-to-one basis and I must admit that I invoked this rule many times.

Back then, there was simply no substitute for getting the ‘T’ accounts down on paper and posting the business transactions. I firmly believe that in our profession ‘learning is by doing’, so it makes sense to attain a core knowledge of bookkeeping and accounts by doing it manually, that is opening up the required ledger accounts on paper (or Word/Excel) and recording the entries ‘manually’. Practise makes perfect, so after a while you will find that you really know your double entry and would wake up in the night in great distress if you had a dream that a Wages account was in credit or the Sales account was in debit.

Having mastered the manual system of bookkeeping first, then is the time to apply IT skills in the form of an accounting software package. This, of course, will automatically produce all invoices, statements, books of prime entry, double entry transactions, trial balance, produce the primary financial statements, namely profit and loss account and balance sheet – job done in the blink of an eye!

Having taught bookkeeping and accounts online since 1999, I have come across so many people who are really adept at using bookkeeping software packages, but do not really understand the financial results generated by them. This is because that person’s  core understanding of the underlying bookkeeping concepts and practices is weak.

• Brian J Harford FCCA, Principal, Woodgrove Tutorials. Woodgrove Tutorials is an IAB Accredited Training Provider. Principal Brian J Harford is an IAB award-winning qualified accountant with 36 years’ teaching experience in bookkeeping and accounts, including 20 years as a part-time lecturer at the London Metropolitan University (formerly Guildhall University).

See www.woodgrove-tutorials.co.uk

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