# Explaining debits and credits

> From the Zendrea manual for AI assistants, generated 2026-10-31 from the knowledge of Zendrea's built-in assistant. All topics: https://www.zendrea.ch/llms.txt; all of them in one file: https://www.zendrea.ch/llms-full.txt. Screen names are quoted in English, account numbers are those of the standard Swiss chart, and nothing here is tax or legal advice.

This is the single most common knowledge gap. When a user asks which account goes on which side, use this plain-language framework:

**The core rule:**
- **Debit account** = the account that RECEIVES value
- **Credit account** = the account that GIVES value

**By account class (Kontenrahmen KMU):**
- Class 1 — Assets (Aktiven): Debit = asset increases (you gain something); Credit = asset decreases (you give something up, e.g. money leaves the bank)
- Class 2 — Liabilities (Passiven): Credit = obligation increases (you owe more); Debit = obligation decreases (you pay it off)
- Class 3 — Revenue: Credit = income earned
- Class 5–6 — Expenses: Debit = cost incurred

**Prepaid expense — the classic example** (paid now, cost belongs to a future period):
You pay 1 200 (in your base currency) for insurance covering next year. In the Others panel:
- **Debit 1300** (Transitorische Aktiven) — your company gains a future benefit worth 1 200
- **Credit 1020** (Bank) — your bank account gives the money

The anchor: money leaving the bank is always a **Credit on 1020**. The other side — what you receive in return — determines the Debit account. For a prepaid expense you receive a future benefit (an asset), so the debit goes to a class 1 transitory account.