The debit/credit indicator indicates whether an account is posted to debit (left-hand side) or credit (right-hand side). The increase or decrease of an account depends on the account category:
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- Asset, expense and cash accountsThese accounts increase when they are debited and decrease when they are credited.
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- Liability, revenue and equity accountsThese accounts behave in reverse - they increase in credit and decrease in debit.
Each journal entry leads to a simultaneous change in at least two accounts, which is the basic principle of double-entry bookkeeping. The value of one account is increased, while the value of another account is reduced.
The debit/credit indicator in SAP Business One
In SAP Business One, the debit/credit indicator is used in various areas to precisely document changes to accounts and ensure correct bookkeeping.
1st document journal
In the voucher journal, the debit/credit indicator for each journal entry shows whether the amount was posted as a debit or a credit. This enables the complete tracking of value changes on the accounts concerned.
2. general ledger accounts
In the ledger accounts the indicator is also used to show on which side of the account the respective postings are to be expected. This makes it easier to interpret the account balances and analyse the financial situation of a company.
3. booking masks
When entering documents, such as incoming invoices or outgoing payments, the debit/credit indicator determines the direction of the posting. This ensures that the postings are correctly distributed to the corresponding debit and credit accounts.
4. reports
In reports such as the balance sheet or the Profit and Loss Account the debit/credit indicator structures the presentation of account balances. It ensures correct allocation of the values on the assets or liabilities side or the expense or income side.
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