Introduction to Double Entry Bookkeeping

Flashcards covering key vocabulary and concepts related to double entry bookkeeping.

Double Entry Bookkeeping

A method of accounting where every transaction affects at least two accounts, recording both debits and credits.

T Account

A visual representation of individual accounts that shows debits on the left and credits on the right.

Debit

An entry on the left side of an account that increases assets and expenses or decreases liabilities and equity.

Credit

An entry on the right side of an account that increases liabilities and equity or decreases assets and expenses.

Assets

Resources owned by a business that have economic value, such as cash, accounts receivable, and inventory.

Liabilities

Obligations or debts that a business owes to others, including loans and accounts payable.

Income

Revenue earned by a business from its operations, also referred to as sales or revenue.

Expenses

Costs incurred in the process of earning income, such as rent, utilities, and salaries.

Drawings

Money taken out of a business by its owner for personal use.

Receivables

Amounts owed to a business by its customers for goods or services sold on credit.

Payables

Amounts that a business owes to its suppliers or creditors.