Accounting process

Accounts Account Examples: Office equipment, Sales, Salaries expense An individual record of increases and decreases in an item that is likely to be of interest or importance   Examples: Office equipment, Sales, Salaries expense

Classification of Accounts Asset accounts Examples: Land; Buildings; Equipment; Cash Liability accounts Examples: Creditors; Wages Payable Owners’ equity accounts Examples: Capital; Retained Earnings; Sales Revenue; Salaries Expense; Dividends

The Double Entry System The T account Debit is left side of T account Credit is right side of T account Debits = Credits

The Accounting Equation Revisited The equation, Assets = Liabilities + Equity can be rewritten as Assets = Liabilities + Capital + Revenues – Expenses – Dividends which can be rewritten as Assets + Expenses + Dividends = Liabilities + Capital + Revenues

Debit and Credit Rules