Basic Accounting Principles: T-Accounts, Debits, Credits, and Journal Entries

Increases in an asset account are shown on a T account's

Bought supplies on account

affects supplies & accounts payable.

An increase in the capital account

is on the debit side.

A credit on an expense account

is a decrease.

A debit on the cash account

is an increase.

Drawing accounts

are decreased by a debit.

Supplies

increase by a debit.

Liability accounts

have a normal credit balance.

Utilities expense

is decreased with a debit.

Paid cash for rent

cash increases and expenses increase.

Paid cash to owner for personal use

drawing increases.

Sold services on account

revenue increases.

Received cash from owner as an investment

cash increases.

Received cash from sales

affects revenue & asset.

Paid cash for miscellaneous expense

affects owner's equity and expense.

Paid cash for utilities expense

affects cash & utilities expense.

The normal balance side of any revenue account

is the credit side.

Decreases in any liability account

are shown on a T account's debit side.

Increases in a revenue account

are shown on a T account's credit side.

Increases in any liability account

are shown on the T account's credit side.

The normal balance side of an owner's drawing account

is the debit side.

The normal balance side of any expense account

is the debit side.

Increases in an owner's drawing account

are shown on a T account's debit side.

The values of all equities or claims against the assets

are on the accounting equation's liabilities and owner's equity.

left side

The values of all things owned (assets) are on the accounting equation's left side.

right side

The side of the accounting equation that typically represents liabilities and owner's equity.

debit side

An amount recorded on the left side of T account is a debit.

credit side

An amount recorded on the right side of T account is a credit.

normal balance

The normal balance side of any asset account is the debit side.

T account

An accounting device used to analyze transactions.

debits must equal credits

Debits must equal credits for each transaction.

accounts receivable

Amounts to be received in the future due to the sale of goods or services.

accounts payable

Amounts to be paid in the future for goods or services already acquired.

debit drawing, credit cash

Paid cash to owner for personal use.

debit advertising expense, credit cash

Paid cash for advertising.

debit accounts receivable, credit sales

Sold services on account.

debit sales, credit cash

Received cash from sales.

debit accounts payable, credit cash

Paid cash on account.

debit supplies, credit accounts payable

Bought supplies on account.

debit prepaid insurance, credit cash

Paid cash for insurance.

debit capital, credit cash

Received cash from owner as an investment.

chart of accounts

A list of accounts used by a business.

debit

An amount recorded on the left side of an account.

credit

An amount recorded on the right side of an account.