ACCT 3

Lesson Topic: Double-entry bookkeeping

I. Debit and Credit entries

-In accounting, Debit (Dr) and Credit (Cr) are the two sides used to record every transaction.

Evevry account/transaction have debits and credits

. Debit: an entry on the left side of an account.

. Credit: an entry on the right side of an account.

⭐ Debit & Credit Cheat Sheet

🧠 Remember this:

DEBIT: Assets ↑, Expenses ↑
CREDIT: Liabilities ↑, Equity ↑, Revenue ↑

total Debit always = total Credit

Cash comes in → Debit Cash ✅
Cash goes out → Credit Cash ✅

But:

Revenue comes in → Credit Revenue ✅

The easiest rule to memorize:

P1: C

P2: C

P3: find jurnal entry

1. Know the 5 types of accounts

Every transaction affects one or more of these:

Easy examples

Cash → Asset
Equipment → Asset
Loan → Liability
Capital → Equity
Sales → Revenue
Rent → Expense

2. Understand Debit and Credit

Don't think of debit as "good" and credit as "bad."

They simply mean:

Debit (Dr) = LEFT side
Credit (Cr) = RIGHT side

Every transaction has both.

⭐ The most important rule:

Assets + Expenses increase → Debit

Liabilities + Equity + Revenue increase → Credit

You can memorize:

A + E = Debit
L + E + R = Credit

3. Understand that accounts can increase OR decrease

For example, Cash is an asset.

If you receive $1,000:

Cash increases → Debit

If you pay $500:

Cash decreases → Credit

So:

This applies to assets:

Asset ↑ = Debit
Asset ↓ = Credit

4. Understand the double-entry concept

This is the main idea of Lecture 3.

Every transaction affects at least two accounts.

And:

Total Debit = Total Credit ✅

Example:

You buy equipment for $3,000 cash.

Two things happen:

1. Equipment increases → Debit Equipment $3,000

2. Cash decreases → Credit Cash $3,000

✅ Balanced!

5. Learn how to analyze a transaction

Before deciding Dr or Cr, ask yourself 3 questions:

Question 1: What accounts are affected?

Question 2: What type of accounts are they?

Question 3: Did they increase or decrease?

Then choose Debit or Credit.

Example:

Business pays $1,000 rent in cash.

Step 1: What accounts?

→ Rent Expense
→ Cash

Step 2: What types?

→ Rent = Expense
→ Cash = Asset

Step 3: Increase or decrease?

→ Expense increases → Debit
→ Cash decreases → Credit

Therefore:

Dr Rent Expense $1,000
Cr Cash $1,000

6. Understand the Accounting Equation

You learned this before:

Assets = Liabilities + Owner's Equity

And your Debit/Credit system must keep everything balanced.

For example:

Owner puts $5,000 into the business.

The business gets:

Cash +$5,000 → Asset increases

The owner's investment creates:

Capital +$5,000 → Equity increases

So:

Assets $5,000 = Equity $5,000 ✅

⭐ Your ACCT 201 cheat sheet

Write this somewhere because you'll use it constantly:

ACCOUNT TYPES

A = Assets → Cash, Equipment, Supplies
L = Liabilities → Loan, Accounts Payable
E = Equity → Capital, Drawings
R = Revenue → Sales, Service Revenue
E = Expenses → Rent, Salary, Utilities

WHEN THEY INCREASE

WHEN THEY DECREASE

And ALWAYS:

TOTAL DEBIT = TOTAL CREDIT ✅

II. Account balances: opening and closing balance

1. How to close off an account

At the end of an accounting period, we calculate the balance remaining in an account.

The basic idea is:

Opening balance + increases − decreases = ending balance

For example:

Opening cash = $2,000
Money received = +$15,000
Money paid = −$1,100
Capital received = +$2,000

Ending cash = $17,900

Practice 1

We need to find the trial balance total on the DEBIT side.

Remember the basic rule:

Debit accounts

• Expenses

• Purchases

• Assets

Credit accounts

• Capital

• Sales

Let's classify each:

Now add the debit side:

$1,800 + $10,000 + $5,000 + $1,000 + $9,200

= $27,000

✅ Answer: D. $27,000

Easy way to remember

Debit = Expenses + Purchases + Assets

So:

Rent + Purchases + Wages + Sundry expenses + Cash
= $27,000

Practice 2

This one is about a Cash account.

Given:

• Opening cash = $2,000

• Payments by customers = +$15,000

• Rent paid = −$250

• Insurance paid = −$150

• Drawings = −$700

• Capital paid in = +$2,000

Step 1: Start with opening balance

$2,000

Step 2: Add money coming IN

Payments by customers:

+$15,000

Capital paid in:

+$2,000

So:

$2,000 + $15,000 + $2,000 = $19,000

Step 3: Subtract money going OUT

Rent:

−$250

Insurance:

−$150

Drawings:

−$700

Total paid out:

$250 + $150 + $700 = $1,100

Step 4: Find ending balance

$19,000 − $1,100 = $17,900

✅ Balance at 31 March = $17,900</strong></p><h4 id="1db0a1d5-fe2e-4bc2-8bff-e0038e385f62" data-toc-id="1db0a1d5-fe2e-4bc2-8bff-e0038e385f62" collapsed="false" seolevelmigrated="true"><span style="font-size: medium;"><strong>How it looks as a T-account</strong></span></h4><table style="min-width: 75px;"><colgroup><col style="min-width: 25px;"><col style="min-width: 25px;"><col style="min-width: 25px;"></colgroup><tbody><tr><th colspan="1" rowspan="1"><p><strong>Cash Account</strong></p></th><th colspan="1" rowspan="1"><p></p></th><th colspan="1" rowspan="1"><p></p></th></tr><tr><td colspan="1" rowspan="1"><p><strong>Debit (money IN)</strong></p></td><td colspan="1" rowspan="1"><p>$

Credit (money OUT)

Balance b/f

2,000

Rent

Payments by customers

15,000

Insurance

Capital

2,000

Drawings

Balance c/f

17,900

Total

36,900

Total

⭐ Bal b/f means Balance brought forward.

It is simply the balance from the previous period that is brought into the new period.

Example:

At the end of March:

Balance c/f = $17,900

Then at the beginning of April:

Balance b/f = $17,900

So:

c/f = carried forward → end of the period
b/f = brought forward → beginning of the next period

🧠 Easy way to remember

b/f = beginning → money/balance brought from before
c/f = closing → balance carried to the next period

⭐c/f means “carried forward.”

It is the ending balance of an account that is carried to the next accounting period.

Simple example:

You have $2,000 cash at the end of March.

In your March Cash Account:

Balance c/f = $2,000

Then when April starts:

Balance b/f = $2,000

🧠 Remember:

• c/f = carried forward → ENDING balance

• b/f = brought forward → BEGINNING balance

PRACTICE 3 : C