The basics of accounting 2

This is where all the daily transactions of a business are recorded... Left side of the balance sheet equationNormal asset balance is a debit... Properties or economic resourcesProv

Debits versus Credits

By Michael Reimer

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

Debit Credit

Properties or economic resources

Provision of future company

benefits

Right side of the balance sheet

equation

Normal liability balance is a 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

 Is linked with another account

counterpart

 Revenues – Expenses = Profit or Loss

Two different types:

Incur costs while doing daily

business

Show a consumption of assets to generate revenues

Withdrawals

Expenses

Capital

Revenues