UNIT 4 DEBITS CREDITS AND EQUITY INSTRUCTIONS TUTORIAL INITIAL TUTORIAL COMPLETED INSTRUCTIONS FOR UNIT 4 Owners equity is critical as the numbers show the financial position of the owners called stockholders in the corporation As equity changes the position of the stockholders changes and the potential for future growth improves or deteriorates Initially a company sells stock to obtain capital It uses the capital to build assets strengthen its position maybe borrow more capital and generate sales To record these transactions it needs a set of accounts to show invested capital revenues from sales expenses incurred to produce sales profit distributed to the stockholder or dividends and reinvested profit called retained earnings Using the tutorial titled Initial look at the first column on the left A list of equity accounts is provided The ones that appear on the balance sheet and the ones that effect or appear on the income statement are listed To the right are columns titled a debit will a credit will For each account write increase equity or decrease in the correct cell If your response is right the adjoining cell will read correct If your response is wrong the adjoining cell will read not correct The default settings are not correct except for capital stock credit dividends debit sales credit and wage expense debit When completed your sheet should have correct for debit and credit on each account The tutorial Completed List shows the correct answers