Debits and Credits An Account shows the effect of transactions on a given asset liability equity revenue or expense account Double entry accounting system two sided effect Recording done by debiting at least one account and crediting another DEBITS must equal CREDITS Slide 3 8 LO 2 Explain double entry rules Debits and Credits An arrangement that shows the effect of transactions on an account Debit Left Credit Right Account An Account can be illustrated in a T Account form Slide 3 9 LO 2 Explain double entry rules Account NameDebit Dr Credit Cr Debits and Credits If Debit entries are greater than Credit entries the account will have a debit balance Account Name Debit Dr Credit Cr Transaction 1 10 000 3 000 Transaction 2 Transaction 3 8 000 Balance 15 000 Slide 3 10 LO 2 Explain double entry rules Debits and Credits If Credit entries are greater than Debit entries the account will have a credit balance Transaction 1 10 000 3 000 8 000 Transaction 2 Transaction 3 Balance 1 000 Slide 3 11 LO 2 Explain double entry rules Account NameDebit Dr Credit Cr Debits and Credits Summary Normal Balance Debit Normal Balance Credit Slide 3 12 LO 2 Explain double entry rules Chapter 3 23AssetsAssetsDebit Dr Credit Cr Normal BalanceNormal BalanceChapter 3 27Debit Dr Credit Cr Normal BalanceNormal BalanceExpenseExpenseChapter 3 24LiabilitiesLiabilitiesDebit Dr Credit Cr Normal BalanceNormal BalanceChapter 3 25Debit Dr Credit Cr Normal BalanceNormal BalanceEquityEquityChapter 3 26Debit Dr Credit Cr Normal BalanceNormal BalanceRevenueRevenue Debits and Credits Summary Statement of Financial Position Income Statement Asset Liability Equity Revenue Expense Debit Credit Slide 3 13 LO 2 Explain double entry rules