Accounting Equation and Modern Approach

Vocabulary flashcards covering the components of the modern accounting approach and the procedural steps for creating journal entries.

Modern Approach

An accounting method for recording journal entries based on the classifications of asset, expense, liability, capital, and income.

Asset (Modern Approach)

One of the two elements categorized under debit when recording increases and credit when recording decreases.

Expense (Modern Approach)

One of the two elements categorized under debit when recording increases and credit when recording decreases.

Liability (Modern Approach)

One of the three elements categorized under credit when recording increases and debit when recording decreases.

Capital (Modern Approach)

One of the three elements categorized under credit when recording increases and debit when recording decreases.

Income (Modern Approach)

One of the three elements categorized under credit when recording increases and debit when recording decreases.

Step $1$ of Journal Entries

Understand the meaning of the transaction.

Step $2$ of Journal Entries

Identify the $2$ elements involved & their increase or decrease.

Step $3$ of Journal Entries

Write journal entry by applying modern approach.