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Analyzing Transactions into Debit and Credit Parts

Chapter 2 Accounting
by

Jessica Nelson

on 10 September 2012

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Transcript of Analyzing Transactions into Debit and Credit Parts

DEBITS & CREDITS Assets = Liabilities + Owner's Equity Left Side Right Side T account An accounting device used to analyze how account balances are changed An amount recorded on the left side of the T-account T Account Left Side DEBIT Right Side CREDIT An amount recorded on the right side of the T-account The side of the account that is increased Normal Balance Assets = Liabilities + Owner's Equity Any Asset Debit Credit NORMAL BALANCE Any Liability Owner's Capital Account Debit Credit Debit Credit NORMAL BALANCE NORMAL BALANCE Assets = Liabilities + Owner's Equity Any Asset Debit Credit Any Liability Owner's Capital Account Debit Credit Debit Credit Decrease Increase Decrease Decrease Increase Increase What does the Account Balance do? Account balances INCREASE on the normal balance side of an account Account balances DECREASE on the side opposite the normal balance side of an account Where is the Normal Balance? Chart of Accounts A list of accounts used by a business NO MORE JUST A PLUS/MINUS SIGN! Cash Transaction: Paid Cash for Supplies $200 Supplies Debit Credit Debit Credit NORMAL BALANCE NORMAL BALANCE -$200 +$200 Assets = Liabilities + Owner's Equity Any Asset Debit Credit NORMAL BALANCE Any Liability Owner's Capital Account Debit Credit Debit Credit NORMAL BALANCE NORMAL BALANCE Decrease Increase Decrease Decrease Increase Increase
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