MGMT 1A Chapter Notes - Chapter 2.1: Retained Earnings, Income Statement
Document Summary
Account : an individual accounting record of increases & decreases in a specific asset / liability / or equity item. Ex. softbyte inc. would have separate accounts for cash, a/r, a/p, service. In simplest form ( t-account ), account consists of 3 parts: Debit : indicates the left side of an account (abbreviated as dr. ) Credit : indicates the right side (abbreviated as cr. ) Making an entry on the right side . Debit balance - if total of the debit amounts exceeds the credits (when comparing the totals of. Credit balance - if the credit amounts exceed the debits. In the account form, we record the increases in cash as debits and the decreases in cash as credits. Having increases on one side and decreases on the other reduces recording errors. Every positive item represents a receipt of cash. Every negative amount represents a payment of cash.
