Accounting Processes

IS 484

Concepts

ConceptsAssets = Liabilities + EquityAssets: Cash, Inventory, Acct Receivable,

Bldg… Debit Increase (+), Credit (-) Liabilities: Account Payable, Debt. Debit (-),

Credit (+)Equity: Stocks, Revenues, Expenses. Debit (-)

Credit (+)

Examples of Accounting Entries Debit (left) Credit (right)

1. Purchase a truck using cash for $5,000: Truck $5,000

Cash $5,000

2. Pay monthly rent $1,000 in cash Rental Expenses $1,000

Cash $1,000

3. Sold inventory for $400 invoice later Account Receivable $400

Inventory $400

4. Customer paid the $400 invoice Cash $400 Account Receivable $400

Exercise: http://college.cengage.com/accounting/mcquaig/college_acc/8e/students/demo/ch01.pdf