> > But it gets even more confusing when they say "we credited your account" or "your account was debited".
> From your business's perspective, your bank account is an asset, so when they deposit into it, then its value increases, hence "debit".
But what you're describing (a business depositing money into your account) is not what I, as a non-business owner, understand by "your account was debited". Businesses with whom I do (well) business use this terminology to mean that they have removed money from my account. (I'm not arguing with you—I've probably just misunderstood your terminology, and am seeking clarification.)
For the "we debited your account" terminology to be correct, you must consider it from the perspective of the other party.
For example, suppose you go into the bank and withdraw $10 and they charge a $1 fee. The transaction looks like this:
* Credits: $1 (bank income), $10 (bank assets)
* Debit: $11 (customer liability)
So when you get your account statement, it will say "$11 debit", because from their perspective, it was a debit, i.e., their liability went down. If that doesn't make sense, think about how you pay your own credit card bill (a liability): you take money from (credit) your checking account and send it (debit) to your creditor.
I know that this isn't the point of this thread, so I'll stop after asking one more question. (This may be a terminally wrong-headed question, and I apologise in advance if so.)
Despite your very clear explanation, I'm still confused by:
> > But it gets even more confusing when they say "we credited your account" or "your account was debited".
> From your business's perspective, your bank account is an asset, so when they deposit into it, then its value increases, hence "debit".
Is it correct that the 'you' of the first post, in "your account was debited" (me the non-business owner), is the 'they' in the second post, of "when they deposit into it" (written from the perspective of the business owner, so that 'you' is no longer me)?
The main source of confusion here is that "your bank account" is actually two different entities whose numeric value happens to be the same:
1) On your books, it is an asset account.
2) On the bank's books, it is a liability account.
When a bank says "your account was debited", they are talking about entity #2. That is, "the account on our books associated with 'you'".
But when you yourself think of the account, you think of thing #1.
Let's say you deposit some cash into your account at the bank. That means you are lending the bank the money (extending it credit). The bank records this as two transaction entries:
* A debit (receiving money) transaction which places more money into their general "money we have" pool: you gave them money.
* A credit (owing more money) transaction: they now owe you more money. This increases the amount of what the bank thinks of as "your account".
The statement they send you at the end of the month only shows the second transaction, because that's the one relevant to "your account" in the sense of #2 above.
If you were keeping books on your side, you would likewise record this as two transaction entries:
* A debit (receiving money) transaction for your bank account (now in the sense of #1 above).
* A credit (having less money in an asset account) transaction for your wallet.
So the upshot is that in the two entities that "your bank account" corresponds to, a debit for #1 is a credit for #2 and vice versa. And when the bank sends you a statement, it describes #2, not #1. Since most people don't interact with the terms "debit" and "credit" normally, this is the only exposure they have to those terms, so they learn them backward....
But it gets even more confusing when they say "we credited your account" or "your account was debited".