Accounting, an important subject of its own, confronts us from our early initiation in its study to certain dilemmas, that in the short range of a novice student or a professional profile outside this technique, it is difficult to rethink or question about the avalanche of knowledge received. and its congruence:
- Why the Debit is must and the Credit is to have? Why are the asset accounts Debtors and those of the liabilities Creditors? Why the asset is integrated by resources and why we owe them?
Given the elementary nature of these concepts in accounting matters, it is especially important to establish a pragmatic, interpretive and empirical position that allows the initiates to assimilate them gently at the time of their learning and as a form of effective communication. in teaching - learning mechanics. For this we will use analysis and reflection focused on the meaning and interpretation that give us an approach in order to clarify the concepts and their reason for being.
Abstract
Accounting, an important area, faces us early on its study and analysis towards some dilemmas. Students, junior professionals or those who are not familiar enough to this profession, hardly rethink or question themselves about the knowledge acquired and its coherence.
- Why the Debit is debit and the Credit is credit? Why the asset accounts are indebted and why the passive accounts are creditor? Why the assets are conformed by the available resources and why those resources are owed?
Due to the fundamental these concepts are in the accountability subject, it is vital to set up a pragmatically, understandable and empiric position the new students can understand easily with the use of effective communication on the teaching-learning process. We will use the analysis focuses on the significance and understanding of concepts itself and its reason of being.
Introduction
Those of us who study Public Accounting receive from our appreciative teachers the communication of knowledge that has evolved over the centuries since the creation of accounting and gradually transformed from artisanal work to the subject of a technical and dynamic profession with breadth of interventions in the economic and financial life of nations, individuals and corporations.
Accounting, an important subject of its own as it constitutes one of the characteristics of the accountant, a subject to which the name of our profession is owed, confronts us from the early initiation of its study with certain dilemmas, which in the short range of a student Novice or someone else's professional profile, before the astonishment of a new knowledge, we seldom pay attention to rethinking or re-questioning about the avalanche of received knowledge and its congruence, for its part, academic practice undergoes a routine process that does not allow reflection and the characteristic analysis of the accounting profession..
We know that double-game theory attempts to build on the given Newtonian principle; that a reaction corresponds to every action and we accept accountants as our own this principle to establish that a credit corresponds to every charge, even though in strict sense it should be said that a charge corresponds to every credit, since in any entity that is that is, the contribution of the partners or sponsors is the initial act and in this sense the amount contributed is paid as a starting point to the share capital or to the patrimony, but finally arguing that the chicken or the egg came first is irrelevant.
The technique tells us that all asset accounts are Debtor in nature, in common cases the asset is defined as the resources of the company from which it expects future returns, a definition that is opposed by saying that the asset accounts are Debtor in nature, then the question arises: are they resources of the organization or should they?
Regarding the concepts of Liabilities and Capital, the elements that make them up are called Creditor accounts, however we talk about them that begin in Haber and are part of Haber and if by having we understand the possession of something or the property of something It is my credit, it is my heritage, how to understand that the accounts that make up the Credit are of a Creditor nature, in any case the Credit should be the Debit and the Credit must, in a certain sense it is contradictory. Is it because of this that accountants are said that no one understands us?
All this must certainly confuse laymen and not so laymen, in any case the questions must compel us to think about the concepts, which in either case do not tell us what they are trying to tell us and investigate what is the reason for everything. it. Our intention is to give meaning to those elementary concepts with which at one time our student experience was nurtured and that upon arriving at the category of teacher it becomes confusing to explain to the new generations, it is said that you learn more when teaching, We seek the logical explanation of the concepts and their application in the treatment of accounting matters. To do this, in this brief document we will try to explain what is clearly not logical.
I.- The Debit and The Credit
If in the past we have stopped questioning accounting concepts and their consistency with others, and if they do not explain the reason for accounting, it is time to ask ourselves, why should debit be debit and credit should be credit? Why are the asset and expense accounts in the results classified as Debtor accounts, while those that make up the Liabilities, Stockholders' Equity and income in the results are Creditors? Why do some accounts start with a charge and others with a subscription?
All this we have mentioned is very elementary, it is the accounting that we were taught in our beginnings and represent concepts extracted from the outline of the basic theory of financial accounting. However, and with the danger of being branded as sacrilegious in the face of a lack of respect for the most basic accounting knowledge, the legacy of those who came before us along the way, with a history in our country that dates back more than 160 years when founds what is now the Higher School of Commerce and Administration of the National Polytechnic Institute, I allow myself to affirm that the Debt understood as such must be the Credit and that the Credit should therefore be the Debt. If the Debit is our resources, it must be a Credit, a patrimony, while if the Debts are placed in the Credit, the Credit must be the Debt,which must be represented by the concepts that make up liabilities and stockholders' equity.
1.1.- The Debt and the Assets
Debt as a technical concept of accounting classifies the assets of the entity that the organized profession defines as; "An asset is a resource controlled by an entity, identified, quantified in monetary terms from which future economic benefits are expected, derived from operations that occurred in the past, that have economically affected said entity" in this sense, the asset represents resources that in the future they will produce profits or benefits, the question is why are these entity resources classified as debit concepts? To whom they owe if they represent resources controlled by an entity.
Let's see it as follows, current assets represented by cash, customers, documents receivable, various debtors, among other accounts are classified as debtor accounts, the same happens with fixed assets, machinery, equipment for transportation and equipment, land, buildings, are debtor accounts. To whom a client of the entity owes, the response of all of us who are accountants is, the client owes the entity, so because this account is called a debtor, it will be that there is a hidden creditor of this client. Surely, yes and in it we will strive to discover it
Furthermore, clients, various debtors, documents receivable represent credits in favor of the entity, in that classification that accountants call collective accounts, they represent individuals and companies that have a debt with the company, however We reiterate these accounts are known as debtor accounts, to whom do they owe? We need to ask ourselves this question to clarify what we are talking about.
The incongruity is much clearer if we allow ourselves to give the same example with other asset concepts different from the collective accounts, since when exemplifying with the customer accounts, various debtors, these can lead us to the easy conclusion that they are called Debtor accounts because they represent third-party debts to the entity, which although it is true, obeys another very different criterion for them to be classified as debtors.
If we continue with the process of asking questions, what happens to cash, machinery, land, buildings, and others, to whom do they owe it? What we think about customers falls to the ground, the answer is that these accounts, for what they represent, never lead us to think that they are debtors and, according to the definition of assets, cash, machinery, buildings and land are resources of the entity, hence how difficult it is for the accounting students to understand in their first approach to the subject, let alone try to explain this gibberish to an entrepreneur.
1.2.- Liabilities, Capital and Credit
We can follow the same path with the concepts that make up Liabilities and Stockholders' Equity, which by definition are the first; "A liability is a present obligation of the entity, virtually unavoidable, identified, quantified in monetary terms and representing a future decrease in economic benefits, derived from operations that have occurred in the past, which have economically affected said entity" as long as by Capital we understand that "It is the residual value of the assets of the entity, after deducting all its liabilities"
The concepts that make up the liabilities and the capital according to their distribution in the accounting system are considered of creditor quality and their position is in the credit. If by having we understand a position of patrimonial privilege, a situation that distinguishes us when we form our own capital, again the concept of Haber as it must be of an account and accounting representation and under the concept of belonging with the quality of creditor accounts calls for confusion. In themselves, the Liability and Capital accounts are Creditors and fully state with precise identification who or who are the creditors, in their case, the suppliers, various creditors, bank loans, shareholders and other ways of expressing a debt, a liability or a part of Stockholders' Equity or Equity.
In reality, the entity is the Debtor of the suppliers, diverse creditors of all the elements that make up the liability and singularly the stockholders' equity, under this logic the Credit should be the Debt, nobody can deny that all the concepts that make up the liability and the capital they are debts of the entity.
Investigating the various connotations for the word have, we also find contradictory concepts in the language for the Haber concept, so as it has a meaning like belonging or property, also for the ideological dictionary of the Spanish language Julio Casares among several meanings for Haber; it tells us that this means being in the obligation of, under this definition we would be able to establish consistency in the term to assign to it by definition that represents the responsibility to pay an obligation, the name of the Creditor account and its placement in the Credit, finding in it however a tautological representation with the Debit.
2.- Dual Vision Proposal
2.1.- Duality of entities
We consider that for a better understanding of the concepts of Debit and Credit and the allocation of debtor accounts and credit accounts that we have been discussing, we must consider that they present two types of realities under which we must subject an entity to scrutiny, an Internal Vision and an External Vision, consistent with the postulate of economic duality;
Economic Duality.- The financial structure of an entity is made up of the resources available to it to achieve its purposes and the sources to obtain said resources, whether their own or those of others. According to the attributes of the personality, all the resources that a company obtains are from external sources, even if they are contributed by the owners or shareholders (own sources), but that is another problem of how the concepts are presented and defined.
NIF A-2 below tells us: Assets represent economic resources that the entity has, (then it does not owe them), while liabilities and stockholders' equity represent participations in obtaining said resources, as of a date. The different elements of the financial statements reflect the effects of the internal transactions and transformations that an economic entity carries out, as well as other events that affect it economically; These effects cause changes in its structure at different intervals or periods of time.
All entities process their resources to generate more economic value and finally convert them into cash. The essence of an asset or resource is precisely its ability to generate future economic benefits for the entity. On the other hand, the sources of said resources are made up of both liabilities and stockholders 'equity or stockholders' equity.
The essence of a liability is a duty (if it is due by definition, then why is it a credit?) Or requirement that represents the sacrifice of future economic benefits derived from past operations, which is manifested when the entity transfers assets or provides services, to satisfy the obligation that it has incurred or that has been imposed on it. In addition, the stockholders' equity or equity represents the book value of the entity's net assets (assets less liabilities).
2.2.- Internal Vision
The internal vision is the one through which the financial statements and reports are observed under the scrutiny of those who had a significant amount of their resources to start a business; the owners or shareholders. In addition, this internal vision is shared by all those to whom the owners have entrusted the good running of the entity, the people who have their administration, the fulfillment of plans, programs and the achievement of certain objectives and goals.
Economic entities, whether they are natural or moral persons dedicated to the public or private sector, possess the attributes of personality that, according to law, distinguish them from one another, namely; the name, address and own assets, which are, in the case of entities, legal entities with a personality different from that of their partners.
In this sense, the entities seen outside the demanding eyes of interested third parties, belong to their partners or shareholders and in this internal vision, the assets of the partners or shareholders are represented in Stockholders' Equity and it is in this condition that the Credit constitutes a patrimonial resource of the partners that not of the entity.
Stockholders 'equity belongs exclusively to the partners to the shareholders, therefore it represents a part of what constitutes their assets, by virtue of which it constitutes an account that is the Creditor of the entity formed by the Equity or Stockholders' Equity and whose creditors are the owners. of the company.
In the same way and due to its financing needs over time, the entity for its operations will be forced to resort to contracting passive operations, where the active subjects are the creditors that are constituted for various reasons, the suppliers of goods and services, banks for which the entity is subject to credit, workers for their daily work and the inseparable partner of the entities, the treasury, among others.
If we endeavor to maintain the criterion that the Credit corresponds to the fact of contracting an obligation, the entity, when classifying the Liability and Capital account as a Creditor, recognizes that quality, this way it is easier to explain and understand the concepts that make up the Having and even considering the other meaning of having, such as patrimony, this qualifier must be assigned considering that it is the patrimony of the owners of the entity and of the third parties interested in it by reason of their commercial operations.
Thus from the internal vision we must understand that the owners 'equity is classified in the concept of stockholders' equity and that there is also the assets of all those people who are represented in the liability category, without trying to achieve a definition for having This should be considered as the patrimonial representation of those who provide and lend resources to the entity for the achievement of its operations, the borrowers of those resources are obviously creditors of the entity and the natural balance of the accounts that comprise them are therefore balances from creditor accounts.
Understood this expression, it is therefore more understandable to perceive what is meant by the concept of the Debt, that from this internal vision the sum of the assets of an entity represents everything that it owes to the creditors represented in the Liability accounts and Stockholders' Equity, so in Assets we will have a list of resources that literally owes them, which are not owned by the company, hence the contradiction with some concepts and definitions contained in the financial information standards and accounting terminology, consequently the accounts of the assets represent accounts denominated debtors for what they represent, since by means of the resources presented in the assets, the total amount of the liabilities and the stockholders' equity must be settled at any given time.
Thus, from the perspective of internal vision and leaving aside concepts and definitions of accounting theory, we can affirm that the MUST is the must and the HABER is the credit and that it is not only a problem of semantics but also of the depth with that these concepts must be interpreted to achieve their full understanding and to spread generously to the new generations.
2.3.- External Vision
Under the concept of external vision, we include the opinion of all third parties interested in the business, whose perception of the figures shown in the financial statements and reports are different in that their objective differs from that of the shareholders. What is interesting for bankers, liquidity, solvency, the amount of fixed assets and stockholders' equity is different from what a supplier may think, who will undoubtedly attend with greater interest the amount of inventories, accounts and documents. receivable for its rotation, working capital, sales, among other concepts.
From this perspective of an external vision, the bankers will undoubtedly be interested in the resources that the entity has in its assets, which is its possibility of liquidating the liabilities, it will then see the assets as a patrimony of the company, where its ability to pay and as a result the asset by definition is a resource that should generate economic benefits in the future and in that meaning of patrimonial resource it must constitute a credit for the entity.
Customers and all those who have to pay a certain amount to the entity are debtors of the same and from this perspective they are debtors of the entity, which means a resource for it and a right to demand payment of obligations and therefore the accounts are of a debtor nature, however these resources make up the equity of the entity as part of the asset, in this case the asset is a debtor of the entity in the concepts already seen of liabilities and stockholders' equity, however as already stated It is a patrimonial asset, so its classification from this perspective is to determine the asset accounts as creditors of what they represent in themselves..
Under the conditions described that happens with cash, inventories, fixed assets, values, to name a few, there is no external representation that says I owe the entity and for this fact it is debtor, the case of clients is not applicable here, in this external vision of the entity the accounts are Debtors the assets are debtors, the Liabilities and the Stockholders' Equity. However, for the external vision and by definition, as already mentioned, these assets are resources, therefore, an asset of the entity.
By reason of this we see that the complication occurs in the HABER as a patrimony, since the MUST be very clear that by its meaning it is a qualifier of the debt with the liabilities and capital and by definition is a credit, hence we conclude that from an external point of view to see the financial statements and reports, the Debit is the Credit and the Credit is the debit. In the credit are the resources represented by the assets that must be sufficient to pay what must be represented in the debts to the liabilities and the stockholders' equity.
Conclusions
1.- The statements and financial reports present a duality that is characteristic of the postulate of economic duality and is based on the theory of double entry and the principle of action.
2.- You are immersed in the development of this work, in the internal and external vision of the entities, in the postulate of economic duality and in the theory of double entry, in which any charge corresponds to a subscription, participation of a legal figure that society uses to give personality to social entities.
This fiction called an entity that is, in most cases, a commercial company whose objective, among others, is to seek profit and that of other companies that are not related to this purpose with a recognized social and service function.
In this fiction or entity created by man when it is constituted by partners, shareholders or owners, it starts from a dimension that at first is little known by its peers, it is a new entity, as long as that is given and preserved this category, the external vision prevails where the patrimony is observed and qualified as a credit of the entity, the resources that its owners have put at risk.
Over time the entity acquires solidity, economic and financial capacity, the development of its operations gives it prestige and offers it a place in the concert of other entities, from there it changes the opinion of the external vision and forks towards the other members of the balance sheet, that is, the assets and the liabilities, even the gaze is directed to the income statement, at that moment the fiction becomes concrete, it is realized, it becomes tangible and a reality is established in which Apparently the entity responds with its resources, acquires personality before third parties that it had of its own at birth.
3.- Credit is a liability or a debt that must be paid to creditors and shareholders, therefore, from an external perspective, Credit is a Debit. While the Debit is the Credit are the resources that the entity has and that allow it to pay the creditors and shareholders, therefore the Debt should be the Credit.
4.- The concepts Debit and Credit are contradictory and do not express their true meaning considering that the information expressed in the financial statements is addressed to various readers and interested in it.
5.- The financial statements must be read considering the two external and internal visions and those of us who study accounting and, in a significant way, those who teach it, we must explain these two visions to see the record of the operations carried out by an entity, so that the reasons why the accounts are named according to their nature and what is the characteristic that is granted or assigned are understood.
6.- The strength of an entity is observed in the greater amount of resources that it presents in its assets and that these come mainly from its stockholders' equity.
7.- Finally I must say that from the internal vision, the asset serves to pay the liabilities and the capital; therefore the liabilities and the capital are creditors of the assets and constitute the Credit of the creditors and owners, they constitute their patrimony. The debts are represented in the asset, the Debt and are a charge or Charge for the entity, to pay means to diminish a debt represented in the Creditors Credit. In principle, liabilities and capital represent the origin of resources and assets the application thereof, hence the financial nature of the financial statements.
8.- The accounting theory is not clear in all the concepts that it analyzes and defines and the organized profession has lost the opportunity in the last two years to propose changes in the transfer process that has been made between the Accounting Principles. Accepted to Financial Reporting Standards. There is a pending assignment for the accountants and professional associations that group them, study, analyze and propose, through their different work commissions, reforms to the financial reporting standards.
Bibliographic Resources
Financial Information Standards.- (2006).- Mexican Institute of Public Accountants.- 2006
edition.- Mexico DF Casares Julio.- (1992).- Ideological Dictionary of the Spanish language.- Gustavo Pili editorial.- Second edition.- Barcelona.
