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Published byAlexandria Revill
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Debits versus Credits By Michael Reimer
Left Side is the debit side Right side is the credit side
This is where all the daily transactions of a business are recorded.
The general journal entries are posted here. The account balances are updated each day.
Assets = Liabilities + Owner’s Equity
Left side of the balance sheet equation Normal asset balance is a debit
Assets go up with a debit Assets go down with a credit Assets Debit Credit
Properties or economic resources Provision of future company benefits
Cash Receivables Supplies Machinery Land Inventory held for sale
Right side of the balance sheet equation Normal liability balance is a credit
Liabilities go up with a credit Liabilities go down with a debit Liabilities Debit Credit
Debts or payables owed by the business A reduction of future assets of the business
Accounts Payable Notes Payable Bank Loan Payable Mortgage Payable
Two Accounts: Capital: records the owner’s investment in the business Withdrawals: records the owner’s personal drawings from the business
Capital goes up with a credit Capital goes down with a debit M. Reimer, Capital Debit Credit
Withdrawals goes up with a debit Withdrawals goes down with a credit M. Reimer, Withdrawals Debit Credit
Is linked with another account Has an opposite balance to its counterpart Reduces the value of its counterpart
Revenues – Expenses = Profit or Loss
Revenues go up with a credit Revenues go down with a debit Revenue Debit Credit
Two different types: Service based: Work provided to customers (Chapters 3 to 5) Retail based: Sales of inventory to customers (Chapter 6)
Sales Commissions Earned Professional Fees Earned Rent Revenue Interest Earned
Expenses go up with a debit Expenses go down with a credit Expenses Debits Credits
Incur costs while doing daily business Show a consumption of assets to generate revenues
Advertising Expense Supplies Expense Telephone Expense Utilities Expense Wages Expense Rent Expense Insurance Expense
Left side is the debit side Right side is the credit side
Assets Withdrawals Expenses
Liabilities Capital Revenues
C2 - 1 Learning Objectives 1.Usefulness of an Account 2.Characteristics of an Account 3.Analyzing and Summarizing Transactions 4.Illustration of Analyzing.
4 The Transaction Learning Objectives
What are the account classifications Asset Asset Liability Liability Owner’s Equity Owner’s Equity Revenue Revenue Expense Expense.
Chapter 2 – Analyzing Transactions
An accounting device used to analyze transactions is a called a/an ____________ T ACCOUNT.
Question Answer Accounting I Debits & Credits Analyzing.
Using T Accounts / Analyzing the Accounting Equation
Finance Foundations Unit 5 Flash Cards Mrs. Sorrell.
BSAD 221 Introductory Financial Accounting Donna Gunn, CA.
Identifying John V. Balanquit.
Week 2. Lots of transactions occur which affect different accounts. The business needs to keep track of the different accounts it is accounting for.
Introduction to Accounting Book keeping Accounting This is a process of detailed recording of all the financial transaction of a business. Each financial.
Chapter 4 The effect of profit or loss on capital and the double entry system for expenses and revenues.
Chapter 3 Business Transactions and the Accounting Equation
Chapter 4 Adjustments, Financial Statements, and the Quality of Financial Reporting Chapter 4: Adjustments, Financial Statements, and the Quality of Financial.
The Accounting System & Double Entry Bookkeeping The principles of double entry bookkeeping and the effect.
Analyzing & Recording Business Transactions
AAT Level 3 Recap on Debits and Credits and Introduction to Income Statement and Statement of Financial Position.
LESSON 12-2 Financial Records and Financial Statements
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