BA (theory of debit and credit)

double-entry bookkeeping

it means that every entry or recording of a transaction has two effects, the value received and value parted with, as applied to a transaction, the value received is the debit and the value parted with is credit

we debit

• asset received

• liabilities paid

• withdrawals or drawing

• cost or losses

• expenses

we credit

• assets given away

• liabilities incurred

• investment or capital

• income or gain

items that increases assets

• investment or capital

• additional investment

• acquisition of things of value by the business

• claims or receivable

• donations of assets

items that decrease assets

• payment of cash

• withdrawal of assets

• sale of assets

• assets given away as donations

items that increase liabilities

• acquisition of things on account

• incurrence of other liabilities

• assumption of a liability

items that decrease liabilties

• payments of accounts

• returns of things bought

• incurrence of another form liability to extinguish a former liability

• ex: a note payable is given for an account payable

items that increase owner’s equity

• original capital

• additional capital

• income

• gains on sale of other assets

components of owner’s equity or capital

• original capital

• additional capital

• income

• drawing or withdrawal

• expenses