Transaction Analysis Module 3

Account

place where all increases and decreases in financial statement items are recorded

T-Account Parts

1. top (heading) - place account name here
2. left side
3. right side

debit

the left side of an account

credit

the right side of an account

debit balance

if debits are greater than credits, the account will have a

credit balance

If credits are greater than debits, the account will have a

normal balance

the side of the account you will find the end balance on, same as whatever side the increase is on

buying on account

not paying right now so transaction has no effect on cash account

Asset

increase - debit
decrease - credit
normal balance - debit

Liability

increase - credit
decrease - debit
normal balance - credit

Equity

increase - credit
decrease - debit
normal balance - credit

Revenue

increase - credit
decrease - debit
normal balance - credit

Expense

increase - debit
decrease - credit
normal balance - debit