Use of Credit & Debit can help ensure transactions are entered properly and the source, destination, and use of funds are properly accounted for.

In PFMA, you simply enter a positive or negative amount indicating if you are adding the amount to the Account (Description) or subtracting from the Account.  Most of the time when entering Income and Expense, you will be adding the amount so simply type the number value.  PFMA will determine whether that would be a Credit or Debit entry and will show the corresponding CR/DR amount for reference.

A simple way to remember Credit (CR) and Debit (DR) use from a personal or business perspective…

CR (Credit) = Creates Revenue

DR (Debit) = Decreases Revenue

You can also think of Creating Revenue as creating available cash.  That available cash then needs to go somewhere.  We can’t just have it floating around in the nether.  We need to either use it for something (decrease it) or put it somewhere like in a bank account.  If we start from this base, we can then derive how Credit & Debit (DR/CR) applies to various types of accounts.  If we have a Credit entry that increases Revenue, then we need a Debit entry to indicate where that Revenue went. The logical first place would be a bank account.  So, we use a Debit entry which increases an Asset account because a Debit entry decreases revenue (or available cash).  From an accounting system perspective, we seek to keep the available cash at zero by balancing both sides (Credit & Debit) of a transaction.  The transaction is not complete until available cash is zero. 

The following diagram provides some examples showing the flow of cash and the corresponding use to Credit and Debit.

The following tables illustrate when Credit vs Debit is used based on whether the balance of the account should be increased or decreased by the transaction entry amount.