4.1.2 Transactions analysis (Increases & Decreases and Debit & Credit)

RULE - Increase

Recorded on the normal balance side of an account (left side)

RULE - Decrease

Recorded on the opposite side of the normal balance (right side)

Accounts with NB of Dr + on the Dr, - on the Cr

Assets, Owner’s Drawings, Expenses

Accounts with NB of Cr - on the Dr, + on the Cr

Liabilities Capital Revenues

Account

a written record of the assets, liabilities, and owner’s equity of a business

Chart of accounts

a list of accounts used by a business to record its financial transactions

Normal Balance

The side of an account in the accounting equation

Double entry system

an accounting system that involves recording effects of each transaction as debits and credits

Account balance

difference between the two sides of an account

Footing

adding the amounts

Rule/Ruling

represents a mathematical operation

Double rule

Represent account balance and final answers

Permanent account/ Real account

account that is brought forward to the next accounting period

Temporary account/ Nominal account

account that is closed at the end of the accounting period

Permanent accounts/ Real accounts

Assets, Liabilities, Owner’s Capital

Temporary Account/ Nominal account

Revenues, Expenses, Owner’s drawing