![Page 1: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/1.jpg)
• Transactions are recorded using debits and credits.
• Every transaction affects at least two accounts.• Equal debits and credits will keep the
accounting equation in balance.
1 © 2013 McGraw-Hill Ryerson Limited.
Double-Entry AccountingDouble-Entry Accounting
Debits = CreditsDebits = CreditsAlways !Always !
LO 3
![Page 2: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/2.jpg)
Liabilities EquityAssets = +EquityAssets Liabilities
+ - - + - +
Double-Entry AccountingDouble-Entry Accounting
LiabilitiesAssets EquityLiabilities
Debit for increases
Credit for decreases
Debit for decreases
Credit for increases
Debit for decreases
Credit for increases
2 © 2013 McGraw-Hill Ryerson Limited. LO 3
![Page 3: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/3.jpg)
Capital
- +
Equity Accounts
Withdrawals
+ -
Expenses
+ -
Revenues
- +
Double-Entry AccountingDouble-Entry Accounting
Debit for decreases
Debit for decreases
Credit for increases
Credit for increases
Debit for increases
Debit for increases
Credit for decreases
Credit for decreases
3 © 2013 McGraw-Hill Ryerson Limited. LO 3
![Page 4: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/4.jpg)
Liabilities EquityAssets = +
An account’s normal balance is the debit or credit side where increases are recorded.
4 © 2013 McGraw-Hill Ryerson Limited.
Normal BalancesNormal Balances
LO 3
![Page 5: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/5.jpg)
Account Type
Assets
Liabilities
Capital
Revenue
Expenses
Withdrawals
5 © 2013 McGraw-Hill Ryerson Limited.
Step 1
Write down the account types using ALCREW.
Remembering Debits and CreditsRemembering Debits and CreditsALCREWALCREW
LO 3
![Page 6: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/6.jpg)
Account Type
Normal Balance
Assets
Liabilities
Capital
Revenue
Expenses
Withdrawals
6 © 2013 McGraw-Hill Ryerson Limited.
Step 2
Write down the normal balance (debit) of A,E,W. The others are credits.
Remembering Debits and CreditsRemembering Debits and CreditsALCREWALCREW
LO 3
![Page 7: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/7.jpg)
Account Type
Normal Balance
Assets Dr
Liabilities
Capital
Revenue
Expenses Dr
Withdrawals Dr
7 © 2013 McGraw-Hill Ryerson Limited.
Step 2
Write down the normal balance, debit, of A,E,W. The others are credits.
Remembering Debits and CreditsRemembering Debits and CreditsALCREWALCREW
LO 3
![Page 8: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/8.jpg)
Account Type
Normal Balance
Assets Dr
Liabilities Cr
Capital Cr
Revenue Cr
Expenses Dr
Withdrawals Dr
8 © 2013 McGraw-Hill Ryerson Limited.
Step 2
Write down the normal balance, debit, of A,E,W. The others are credits.
Remembering Debits and CreditsRemembering Debits and CreditsALCREWALCREW
LO 3
![Page 9: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/9.jpg)
Account Type
Normal Balance
To ↑Balance
To ↓Balance
Assets Dr Dr
Liabilities Cr Cr
Capital Cr Cr
Revenue Cr Cr
Expenses Dr
Withdrawals Dr
9 © 2013 McGraw-Hill Ryerson Limited.
Step 3
Remember, increases are the same as the normal balances, decreases are the opposite.
Remembering Debits and CreditsRemembering Debits and CreditsALCREWALCREW
LO 3
![Page 10: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/10.jpg)
Account Type
Normal Balance
To ↑Balance
To ↓Balance
Assets Dr Dr Cr
Liabilities Cr Cr Dr
Capital Cr Cr Dr
Revenue Cr Cr Dr
Expenses Dr
Withdrawals Dr
10 © 2013 McGraw-Hill Ryerson Limited.
Step 3
Remember, increases are the same as the normal balances, decreases are the opposite.
Remembering Debits and CreditsRemembering Debits and CreditsALCREWALCREW
LO 3
![Page 11: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/11.jpg)
Account Type
Normal Balance
To ↑Balance
To ↓Balance
Assets Dr Dr Cr
Liabilities Cr Cr Dr
Capital Cr Cr Dr
Revenue Cr Cr Dr
Expenses Dr Dr Cr
Withdrawals Dr Dr Cr
11 © 2013 McGraw-Hill Ryerson Limited.
Remembering Debits and CreditsRemembering Debits and CreditsALCREWALCREW
LO 3
![Page 12: Transactions are recorded using debits and credits. Every transaction affects at least two accounts. Equal debits and credits will keep the accounting](https://reader033.vdocuments.us/reader033/viewer/2022051113/56649cf05503460f949c00e5/html5/thumbnails/12.jpg)
Mini-QuizMini-Quiz
Indicate whether a debit or credit is needed to:• Increase Rent Expense
• Decrease Accounts Payable
• Decrease Accounts Receivable
• Decrease Cash
• Increase Withdrawals
20 © 2013 McGraw-Hill Ryerson Limited.
DebitDebit
Credit
Credit
Debit
LO 3