1. Temporary Accounts and Permanent Accounts
Revenue, expense, and withdrawal accounts are used to collect information for a single accounting period. These accounts are called Temporary Accounts.
Dollar amounts in Temporary Accounts are not carried forward from one accounting period to the next. Temporary Accounts start each new accounting period with a zero balance.
Assets, liabilities, and owner’s capital accounts are Permanent Accounts.
Dollar amounts in Permanent Accounts are carried forward from one accounting period to the next. Permanent Accounts are continuous from one accounting period to the next.

2. Rules for Revenue Accounts
A revenue account is increased on the credit side.
A revenue account is decreased on the debit side.
The normal balance for a revenue account is the credit side.
Decrease on the left
side
Increase on the right
side
Revenue Account
Debit Side
Credit Side - +
Normal balance on the credit
side
Normal
Balance

3. Rules for Expense Accounts
An expense account is increased on the debit side.
An expense account is decreased on the credit side.
The normal balance for an expense account is the debit side.
Increase on the left
side
Decrease on the right
side
Expense Account
Debit Side
Credit Side + -
Normal balance on the debit
side
Normal
Balance

4. Rules for Withdrawal Accounts
A withdrawal account is increased on the debit side.
A withdrawal account is decreased on the credit side.
The normal balance for a withdrawal account is the debit side.
Increase on the left
side
Decrease on the right
side
Withdrawal Account
Debit Side
Credit Side + -
Normal balance on the debit
side
Normal
Balance

5. Summary of Rules for Temporary Accounts
The balances in the Temporary Accounts are transferred into the Owner’s Capital Account at the end of each accounting period.
Owner’s Capital Account
Debit Side
Credit Side - +
Expense Account
Normal Balance
Debit Side
Credit Side + -
Normal Balance
Revenue Account
Debit Side
Credit Side - +
Withdrawal Account
Normal Balance
Debit Side
Credit Side + -
Normal Balance

6. Revenue Transactions + - - + = Cash in Bank Delivery Revenue 1,200
Business Transaction 8
Roadrunner received a check for $1,200 from a customer, Sims Corporation, for delivery services.
1) Identify
2) Classify
3) Increase
or Decrease
4) Debit and
Credit Rule
5) Do Debits
Equal Credits
Accounts affected are Cash in Bank and Delivery Revenue
Cash in Bank is an asset account and Delivery Revenue is a revenue account
Cash in Bank is increased by $1,200 and Delivery Revenue is increased by $1,200
Asset accounts are increased on the debit side and revenue accounts are increased on the credit side
Debits equal credits
Cash in Bank
Delivery Revenue + - - + =
1,200
Debit
1,200
Credit
1,200
1,200

7. Expense Transactions + - + - = Cash in Bank Rent Expense 700 700
Business Transaction 9
Roadrunner wrote a check for $700 to pay the rent for the month .
1) Identify
2) Classify
3) Increase
or Decrease
4) Debit and
Credit Rule
5) Do Debits
Equal Credits
Accounts affected are Rent Expense and Cash in Bank
Rent Expense is an expense account and Cash in Bank is an asset account
Rent Expense is increased by $700 and Cash in Bank is decreased by $700
Expense accounts are increased on the debit side and asset accounts are decreased on the credit side
Debits equal credits
Rent Expense
Cash in Bank + - + - =
700
Debit
700
Credit
700
700

8. Credit Expense Transactions
Business Transaction 10
Beacon Advertising prepared an advertisement for Roadrunner. Roadrunner will pay Beacon’s $75 fee later .
Accounts affected are Advertising Expense and Accounts Payable – Beacon Advertising
1) Identify
2) Classify
3) Increase
or Decrease
4) Debit and
Credit Rule
5) Do Debits
Equal Credits
Advertising Expense is an expense account and Accounts Payable – Beacon Advertising is a liability account
Advertising Expense is increased by $75 and Accounts Payable – Beacon Advertising is increased by $75
Expense accounts are increased on the debit side and liability accounts are increased on the credit side
Debits equal credits
Accounts Payable
Beacon Advertising
Advertising Expense + - - + = 75
Debit 75
Credit 75 75

9. Credit Revenue Transactions
Business Transaction 11
Roadrunner billed City News $1,450 for delivery services.
Accounts affected are Accounts Receivable – City News and Delivery Revenue
1) Identify
2) Classify
3) Increase
or Decrease
4) Debit and
Credit Rule
5) Do Debits
Equal Credits
Accounts Receivable – City News is an asset account and Delivery Revenue is a revenue account
Accounts Receivable – City News is increased by $1,450 and Delivery Revenue is increased by $1,450
Asset accounts are increased on the debit side and revenue accounts are increased on the credit side
Debits equal credits
Accounts Receivable – City News
Delivery Revenue + - - + =
1,450
Debit
1,450
Credit
1,450
1,450

10. More Expense Transactions
Business Transaction 12
Roadrunner paid a $125 telephone bill with check 104 .
1) Identify
2) Classify
3) Increase
or Decrease
4) Debit and
Credit Rule
5) Do Debits
Equal Credits
Accounts affected are Utilities Expense and Cash in Bank
Utilities Expense is an expense account and Cash in Bank is an asset account
Utilities Expense is increased by $125 and Cash in Bank is decreased by $125
Expense accounts are increased on the debit side and asset accounts are decreased on the credit side
Debits equal credits
Utilities Expense
Cash in Bank + - + - =
125
Debit
125
Credit
125
125

11. Even More Expense Transactions
Business Transaction 13
Roadrunner wrote check 105 for $600 to have the office repainted .
1) Identify
2) Classify
3) Increase
or Decrease
4) Debit and
Credit Rule
5) Do Debits
Equal Credits
Accounts affected are Maintenance Expense and Cash in Bank
Maintenance Expense is an expense account and Cash in Bank is an asset account
Maintenance Expense is increased by $600 and Cash in Bank is decreased by $600
Expense accounts are increased on the debit side and asset accounts are decreased on the credit side
Debits equal credits
Maintenance Expense
Cash in Bank + - + - =
600
Debit
600
Credit
600
600

12. Withdrawal Transactions
Business Transaction 14
Maria Sanchez wrote check 106 to withdraw $500 cash for personal use .
1) Identify
2) Classify
3) Increase
or Decrease
4) Debit and
Credit Rule
5) Do Debits
Equal Credits
Accounts affected are M. Sanchez, Withdrawals and Cash in Bank
M. Sanchez, Withdrawals is an owner’s equity account and Cash in Bank is an asset account
M. Sanchez, Withdrawals is increased by $500 and Cash in Bank is decreased by $500
Owner’s equity accounts are increased on the debit side and asset accounts are decreased on the credit side
Debits equal credits
M. Sanchez, Withdrawals
Cash in Bank + - + - =
500
Debit
500
Credit
500
500

13. 3,000 (3)
(1) 25,000
(11) 1,450
(5)
200 (7)
350 (6)
(7)
700 (9)
(8) 1,200
Bal 1,450
Bal
125 (12)
600 (13)
500 (14)
Bal 21,125
(2) 400
200 (5)
(4) 12,000
(3) 3,000
Bal 12,000
Bal 200
Bal 3,000
75 (10)
(6)
12,000 (4)
25,000 (1)
11,650 Bal
400 (2)
75 Bal
25,400 Bal
(14)
1,200 (8)
(10)
Bal
1,450 (11)
Bal
2,650 Bal
(9)
(12)
(13)
Bal
Bal
Bal

14. Testing for Equality of Debits & Credits