📘 1. Debits and Credits

🔹 What Are They?

In double-entry accounting, every financial transaction affects at least two accounts — one is debited, and the other is credited.

• A debit (Dr) is an entry on the left side

• A credit (Cr) is an entry on the right side

🔹 Debit and Credit Rules by Account Type

📌 Always balance: Total debits = total credits for each transaction

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🧾 2. Types of Accounts

🔹 A. Assets

Resources owned by the business
Examples: Cash, Equipment, Accounts Receivable

🔹 B. Liabilities

Obligations the business owes
Examples: Loans, Accounts Payable, Salaries Payable

🔹 C. Equity

Owner’s claim on the business after liabilities
Examples: Capital, Retained Earnings

🔹 D. Revenue (Income)

Money earned from business operations
Examples: Sales, Service Revenue

🔹 E. Expenses

Costs incurred to generate revenue
Examples: Rent, Salaries, Utilities

🧠 These 5 account types form the core of all accounting systems.

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📓 3. Recording Transactions in the General Journal

🔹 What is a Journal?

The general journal is the book of original entry where all transactions are recorded chronologically with a brief description.

 

📒 4. Posting to the General Ledger

🔹 What is the General Ledger (GL)?

The ledger is where each account from the journal is maintained individually, showing all debits and credits over time.

Each account has a T-account or a running total format, which helps determine the account’s balance.

 

📊 Summary Table