COMMERCE 1AA3 Chapter Notes - Chapter 3: Trial Balance, The Ledger, Income Statement
3 Jun 2015
School
Department
Course
Professor
Document Summary
Transactions are recorded first in the journal in a chronological order, each transaction affects at least two accounts (double entry), each transaction has counterbalancing entries that keep total assets equal to total liabilities and owners" equity. That is, the accounting equation must be balanced after recording each transaction. 4 the amount of the change in each account, and. 5 whether the account balances are increased or decreased. If an asset account increased, make it debit, and if decreased, make it credit. If a liability account increased, make it credit, and if. If a capital account increased, make it credit, and if. If an expense account increased, make it debit, and if. If an revenue account increased, make it credit, and if. If a company declared dividends, make it debit (regardless of whether they are paid or not. Every account balance is derived from four components: beginning balance, + increases, decreases, = ending balance.
