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Accounting

Debits represent left side entries in accounting, while credits represent right side entries. Assets have normal debit balances and appear on the left side of the accounting equation. Liabilities and owner's equity have normal credit balances and appear on the right side of the equation. Increases to accounts are recorded on the normal or beginning balance side, with asset increases recorded on the left debit side and liability/equity increases recorded on the right credit side.

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89 views1 page

Accounting

Debits represent left side entries in accounting, while credits represent right side entries. Assets have normal debit balances and appear on the left side of the accounting equation. Liabilities and owner's equity have normal credit balances and appear on the right side of the equation. Increases to accounts are recorded on the normal or beginning balance side, with asset increases recorded on the left debit side and liability/equity increases recorded on the right credit side.

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api-262218593
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Debits mean LEFT side entries Credits mean RIGHT side entries

Does not necessarily increase or decrease an amount!

A ssets = L iabilities + O wner’s Equity (Capital)

Debit side (Dr) Credit side (Cr)


All Assets NORMAL balances will be All Liabilities and Owner’s Equity NORMAL
on the LEFT side! balance will be on the RIGHT SIDE.

T-Accounts

Assets Liabilities Owner’s Equity (Capital)


Debit (Dr) Credit (Cr) Debit (Dr) Credit (Cr) Debit (Dr) Credit (Cr)

Beginning Bal Beginning Bal Beginning Bal

     

 All increases to accounts occur on the NORMAL (Beginning Balance) side!


 Assets are located on the Left (debit) side of the “equal” sign. So, ALL assets would have a Normal Balance of a
(Dr) on the left side.
 The beginning balance for ALL accounts is determined by the accounts place in the accounting equation.
o Assets are on the left of the equation, thus having a (Dr) balance.
o Liabilities & Owner’s Equity are on the right side of the equation, thus having a (Cr) balance.

1. Where would you show an (increase) to an account’s balance? ______________________________________

2. Where would you show an (increase) on a liability? ________________________________________________

3. Where would you show an (increase) to owner’s equity? ___________________________________________

4. Where would you show a (decrease) to accounts? ________________________________________________

Examples of Assets: (Cash / Supplies / Prepaid Insurance)


Liabilities: (Accounts Payable, “company name” / Any Debt you owe)
Owner’s Equity: (John Doe, Capital) (What the business has left from assets after all debt)

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