Guest Author - Mary Salzman

One item of concern for my first year students or master's level students that are only taking accounting because they 'have' to - that is, it is one of the required core classes for an MBA is how to write journal enties. It is not so much the logistics of presenting the journal entry that causes concern but how to figure out what is debited and what is credited.

There are six major journals in accounting: cash receipts, cash payments, sales, payroll, purchases and general. For all journals the rule of debits and credits is the same but most journal entries for beginning accounting classes are written in the general journal. Transactions are recorded in the general journal that just do not logically fit in anywhere else. For example, bank charges shown on the bank statement or accruals.

I think a lot of the problem with writing journal entries lies in the initial presentation of account transactions in accounting textbooks. To kind of ease students into how to write journal entries every accounting textbook I have ever used will start off by having the student use a transaction summary. This transaction summary uses pluses and minuses to record transactions. Follow these two examples as they would be reflected in a transaction summary:

1. Your company receives and immediately pays it's telephone bill - the company records a minus to cash and a plus to telephone expense.
2. Take it one step further: Your company is paying last month's telephone bill - this would be reflected as a minus to cash and a minus to accounts payable.

Ok - this still is pretty easy to understand. But in the first example the plus to telephone expense is a debit. In the second example the minus to accounts payable is also a debit.

This type of tutorial while technically correct does not logically introduce the accounting student to the rule of debits and credits. It is totally confusing for the student as they try to puzzle out what is going on with the pluses and minuses and in many cases it leads the accounting student to think that a minus is always a debit (or a minus is always a credit) and vice versa.

I am of the opinion that students would be better served by just getting on with the correct presentation of journal entries without all the minus and plus hoopla.

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