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4.2 Debit/ Credit Theory

4.2 Debit/ Credit Theory. Debit An entry recording an amount owed, listed on the left-hand side or column of an account. Credit The ability to obtain goods or services before payment, based on the trust that payment will be made in the future: "unlimited credit". Review of Debit & Credit.

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4.2 Debit/ Credit Theory

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  1. 4.2 Debit/ Credit Theory

  2. Debit • An entry recording an amount owed, listed on the left-hand side or column of an account. • Credit • The ability to obtain goods or services before payment, based on the trust that payment will be made in the future: "unlimited credit". Review of Debit & Credit

  3. View the video to get an understanding Debit/ Credit Theory

  4. Assets + = Liabilities Owner’s Equity - Increase Decrease - - + + + Debit (DR) Credit (CR) Debit Debit Credit Credit Write at top of handout

  5. Any item on the balance sheet that records changes from that item. • LEDGER  Group of accounts 4.1 Accounts

  6. Assets are increased on the debit side • Liabilities are increase on the credit side • Owner’s Equity is increase on the credit side Increases

  7. Assets are decreased on the credit side • Liabilities are decreased on the debit side • Owner’s Equity is decrease on the debit side Decreases

  8. Accounts are increase on the side they appear in the fundament accounting equation Assets = Liabilities + Owner’s Equity

  9. Accounts are decreased on the opposite side to which they appear in the equation

  10. Complete exercise #1 p. 91 (t), p. 35 (w) • Fill in the boxes with + or -

  11. 6.1 Journal Entry

  12. Ex. 3 p. 91 (t), pg. 35 (w)

  13. Ex. 3 pg. 91-92 (t) Flora Siska

  14. Complete Ex. 4 pg. 92-93 (t) pg. 36(w)Use back side of journal paper to journalize each transaction Crooks Garage

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