Accounting Fundamentals

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7 Terms

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What is the purpose of a general journal in accounting

The initial record where all of a business's financial transactions are logged in chronological order

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What is the accounting equation 

Assets = Liabilities + Owner's Equity

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How must it always remain balanced

Because every transaction has an equal double effect that offsets both sides

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Short-Term Impact

The immediate effect on cash flow, day-to-day survival, and paying current bills

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Long-Term Impact o

The future effect on overall wealth, solvency, and paying off long-term debts

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Double Entry: The Debit Rule

Debits increase Assets and Expenses

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Double Entry: The Credit Rule

Credits increase Revenue, Liabilities, and Owner's Equity