Any transaction is based on the old trading principle. It is a give and receive situation. If you give something and then you should receive something of equal value in return. The same applies to the person from whom you have received something - He or she also gives something and receives something of equal value in return. These business transactions are always written up or entered into two accounts.
If you know where your left-hand side and right-hand side is, when you are sitting at a desk, you already know something about accounting. Debit is always on your left-hand side and a credit is always on your right-hand side.
The following example illustrates debits and credits:
On 1 March your business sells goods to the value of R 100 to a customer on credit and issues a sales invoice for the transaction:
On 1 March the business gives the goods to the value of R 100 to the customer.
On 1 March the customer receives the goods to the value of R 100 from the business.
The customer account debit is debited and the sales account is credited.
What happens if the customer settles his account with the business on 20 March?
Your business will issue a receipt of R 100 as a source document.
On 20 March Tom gives the money to the value of R 100 to the business.
On 20 March the business receives the money to the value of R 100 from Tom.
You will debit the bank and credit the customer account.