Debiting and Crediting (2 pages)

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Debiting and Crediting



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Debiting and Crediting

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Lecture number:
4
Pages:
2
Type:
Lecture Note
School:
University of Arizona
Course:
Acct 200 - Introduction to Financial Accounting
Edition:
1

Unformatted text preview:

ACCT 200 1st Edition Lecture 4 Outline of Last Lecture I Review of Key Points to Remember II Transactions Journal III Solutions to Brief Exercise 2 10 IV Solutions to E 2 3 V Intro to Debits and Credits VI Basic Accounting Equation Expanded with Debits and Credits Outline of Current Lecture I Important Things About Debits and Credits II Example Current Lecture When you pay a phone bill you have less cash asset and less retained earnings equity Cash is decreased so credited Retained earnings are going down because an expense went up and when an expense increases it is debited So for every business transaction there should be a debit and a credit Total debits must equal total credits in a trial balance the summary of the ending balance in each account is called a trial balance Debits are referred to as left and credits as right Debits are written above credits and credits should be indented Moving debit and credit info from the journal to individual accounts in the general ledger is called posting Assets and expenses should have a debit balance Dividends have to have a debit balance Liabilities and revenues should have a credit balance Common stock has to have a credit balance A checking account should be a debit but if it has a credit then it is overdrawn It is rare to credit an expense Example Debit Credit 1 Company receives 20 000 cash in exchange for common stock Cash 20 000 Common Stock 20 000 2 Rented computer for 100 month made June payment by check Rent expense 100 Cash 100 3 Bought supplies on account for 1950 Supplies 1950 Acct payable 1950 4 Bought furniture 2500 cash and 1500 on account Equipment 4000 Cash 2500 Acct payable 1500 5 Advertised for 200 cash Adv Expense 200 Cash 200 6 Received advance payment of 500 Cash 500 Unearned revenue 500 7 Paid utilities for June 400 Utilities expense 400 Cash 400 8 Paid 60 900 of a 1500 liability Acct payable 900 Cash 900 9 Collected fees for 3900 Cash 3900 Revenue 3900 10 Paid salary of 2000 Salary expense Cash 2000



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