TRANSACTIONS THAT AFFECT REVENUE, EXPENSES AND WITHDRAWALS

Chapter 5

Relationship of Revenue, Expenses and Withdrawals to Owner’s Equity

Temporary Accounts – Accounts that are used to collect information for a single accounting period. Examples: Revenue, Expenses,

Withdrawals Permanent Accounts – Accounts that are

continuous from one accounting period to the next.

Temporary Accounts that Affect Capital

Increases to Capital Ex:

Decreases to Capital Ex:

Rules of Debit and Credit for Expenses and Withdrawals

Expense Accounts Increased on the debit side (left side) Decreased on the credit side (right side) The Normal Balance for Expenses is the

Debit side

Debit+

Increase SideNormal Balance

Credit-

Decrease Side

Expenses

Rules for Revenue and Fees

Revenue and Fees Accounts Increased on the Credit (Right) side Decreased on the Debit (Left) side Normal Balance on the Credit side

Debit-

Decrease Side

Credit+

Increase SideNormal Balance

Revenue / Fees