Business computing L 5 the machinery of a
Business computing L 5 : the machinery of a bank account
A bank account • Let’s create a fake bank account recording money paid to us, and money we pay out. • Whenever money comes in it is recorded in the left column • Whenever we pay something it is recorded in the right column • We don’t use + and – because they were invented around 1400/1500…
A debtor • When we do work for Alfred, but he will pay us in one month (40 euros), we cannot record 40 in the left column at the date of the work • If we did that we’d have a wrong view of our money at the bank • So we record 40 in a « Alfred debtor account » in a left column called DEBIT • And when Alfred pays, we enter 40 in the right column
A creditor • When I buy groceries for 130 euros, but I only promise to pay in 2 months, the grocer becomes my Creditor • I enter in the right column of an account of the money I owe him 130 • That right column is named « CREDIT » • « Credere » in latin means « to trust »
Grocer’s account
My bank account
History • Around the XIIth century tradesmen in Venice and in the large european fairs (Troyes, Scarborough, etc. ) created accounts other than the money account, to handle the problem of debtors and creditors • It lead to the naming of the two columns of any account
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