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Gold/Mining/Energy : Century Mining Corporation -- Ignore unavailable to you. Want to Upgrade?

To: hubris33 who wrote (436)	6/20/2007 9:52:08 AM
From: John McCarthy	Read Replies (2) \| Respond to of 545

H3- Wanna be clear about this so there is NO CONFUSION >>>>>>>>>>>>>>>>>>>> 5. While I understand the point made, I'm a bit confused with the debits and credits. The balance sheet account "reserve" is an asset account? asset accounts are normally debits? a debit to reserve should increase the balance in the account? expense accounts are normally credit accounts? a credit to an expense account increases the balance? >>>>>>>>>>>>>>>>>>>> Ordinary Balance Sheet Accounts -------------------------------- Assets - DEBITS Liabilities - CREDITS Retained Earnings and Paid in Capital - Credits Ordinary - P&L Accounts -------------------------------- Expenses - Debits Revenue - Credits ************************* Confusion I introduced *********************** When I was talking about a Promotion Coupon Reserves I was talking about a Liability So the entry was: P&L ------------- Debit - Expense Balance Sheet -------------- Credit - Promotional Couponing Reserve VERY SUBTLE SUMMARY ------------------------ The above reflects (1) One half of the transaction going to the P&L (2) One half of the transaction going to the Balance Sheet and specifically the Liabilities portion of the balance sheet. *********************** CMM transactions ARE DIFFERENT for two very different reasons ************************* (a) They reflect a debit/credit WITHIN the balance sheet - No entry goes to P&L (b) Most confusing -- whereas the word RESERVE ordinarily refers to a liability account e.g. Promotional Coupon Reserve -- in this case it PROPERLY relates to an ASSET ACCOUNT reserve. (c) The CMM transactions are as follows: Remember - ordinarily ASSETS reflect DEBITS (1) Cash - an Asset Account CREDIT - CASH (meaning reduce it) DEBIT - RESERVE FOR DEFERRED STRIPPING COSTS (meaning increase it) Both of the transactions above are WITHIN the ASSET category contained within the Balance Sheet. In english we are taking money out of cash to pay for all the happy horseshit that you described - and therefore - HAVE CREDITED CASH - --but-- RATHER THAN DEBIT EXPENSE on the P&L for SALARY and whatever ..... we are DEBITTING a RESERVE FOR DEFEREED STRIPPING ASSET ACCOUNT on our balance sheet - and hence - there is NO EXPENSE hitting the P&l. I know this may not be clear - but gotta go. regards, John