Debit and Credit
Associate Level Material
Appendix B
Debits and Credits
Consider the information presented in PhxKlips™ Debits and Credits. Pay particular attention to the meaning of debits and credits and their effects on accounts. Then follow the instructions below. 1. Write a response to the following questions:
In what two ways is the word debit defined in Debits and Credits?
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Debits are defined as the left side of the T-account. This is where we record our “Expense” account, some examples of debits that would be recorded are the cost of goods, salary expense accounts and utility expenses. Accounts on the left side of the accounting equation (assets) have
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a normal balance on the debit side of the T-account. For every cash sale, cash increase we record it as a debit.
In what two ways is the word credit defined in Debits and Credits?
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Credits are defined as the right side of the T-account. This is where we record our “Revenue” account, some examples would be retained earnings. When there is an increase in sales it is always recorded on the credit side (right). Accounts on the right side of the equation (Liabilities/Owners Equity) have a normal balance on the credit side of the T-account. For any retained earnings increase is recorded as a credit.
2. Complete the following matrix. To do so, ask yourself questions, such as:
* What increases the Asset account, a debit or a credit? * What decreases the Asset account, a debit or a credit? * What is the normal balance of the Asset account, a debit or a credit?
Account Changes | Account Categories | What increases the account? | What decreases the account? | What is the normal balance? | Assets | Debit | Credit | Debit | Liabilities | Credit | Debit | Credit | Equity | Credit
Appendix B
Debits and Credits
Consider the information presented in PhxKlips™ Debits and Credits. Pay particular attention to the meaning of debits and credits and their effects on accounts. Then follow the instructions below. 1. Write a response to the following questions:
In what two ways is the word debit defined in Debits and Credits?
-------------------------------------------------
-------------------------------------------------
Debits are defined as the left side of the T-account. This is where we record our “Expense” account, some examples of debits that would be recorded are the cost of goods, salary expense accounts and utility expenses. Accounts on the left side of the accounting equation (assets) have
-------------------------------------------------
a normal balance on the debit side of the T-account. For every cash sale, cash increase we record it as a debit.
In what two ways is the word credit defined in Debits and Credits?
-------------------------------------------------
Credits are defined as the right side of the T-account. This is where we record our “Revenue” account, some examples would be retained earnings. When there is an increase in sales it is always recorded on the credit side (right). Accounts on the right side of the equation (Liabilities/Owners Equity) have a normal balance on the credit side of the T-account. For any retained earnings increase is recorded as a credit.
2. Complete the following matrix. To do so, ask yourself questions, such as:
* What increases the Asset account, a debit or a credit? * What decreases the Asset account, a debit or a credit? * What is the normal balance of the Asset account, a debit or a credit?
Account Changes | Account Categories | What increases the account? | What decreases the account? | What is the normal balance? | Assets | Debit | Credit | Debit | Liabilities | Credit | Debit | Credit | Equity | Credit