Accounting and bookkeeping starts right from the debit and credit. Debit and credits are the fundamentals of accounting. Without this debit and credit nothing can be accomplished in accounting.
In simple words debit means expenditure and credit means revenue. Whenever an organization is making payments it means the organization is debiting some amount. Similarly when an organization is getting some revenue it is said that the organization is getting credit.
Both these debit and credit should be supported with the proper head of account. In accounting principles head of account plays crucial role along with the payment or receipt in an organization. It means segregating the payment and receipt as per accounting principles with relevant head of account.
Normally when a payment is made from an organization it should be supported by a document which is called payment voucher. Similarly when a receipt is received in an organization it should be supported by a document which is called receipt.
Payment vouchers are the basis for maintaining cash book. Cash book is the consolidated record for every payments made in the organization. Cash book is the source for maintaining general ledger. All receipts and payments in an organization should be posted into the general ledger head of account wise.
General ledger is another important document in accounting. Through the balances arrived in the general ledger trial balance is constructed. Trial balance is an abstract of expenditures and receipts in an organization with relevant head of account wise. Normally trial balance has to be constructed every month. An annual trial balance has to be constructed at the end of every financial year.