True: In double entry accounting the debits and credits must balance.
For every action there is an equal and opposite reaction: Meaning, if you debit your cash for $1500 there has to be a credit that equals the same amount.
Remember the accounting equation: Assets = Liabilities + Owners Equity
Let's look at a few scenarios of why we might have received $1500 cash and the accounts they would be posted to:
1. We received $1500 cash for services rendered (revenue) our entry would be:
Cash (debit) $1500
Revenue (credit) $1500
2. We received cash from a customer who purchased merchandise on account, our entry would read:
Cash (debit) $1500
Account Receivable (credit) $1500
3. We Invested $1500 of our personal money into our business: the entry will be:
Cash (debit) $1500
Owners Equity (credit) $1500
As you notice there are always an equal debit to a credit, even if more than one account needs to be used, once such scenario, say we paid $1500 for Phone and Rent and we want to record the transaction as one, we'd use the following journal entry:
Phone Expense (debit) $300
Rent Expense (debit) $1200
Cash (credit) $1500
Notice that even though we used three separate accounts, the debits and the credits always balance for a total of $1500
journal entries can be undone by reversing the original entries by credit the debit account and debit the credit account.
The accounting journal entries for penalties and interest on taxes will go in the debit and credit columns. You debit the expense account and credit the liability account until the penalties and interest is paid.
Basic entries are as follows: Debit Bank Cash Book account with the Cash amount received Credit Rental Income account with Cash amount received
Example of journal entries are as follows: 1 - Start of business [Debit] Cash /bank / goods [Credit] owners equity 2 - Purchase of asset [Debit] Asset account [Credit] Cash / bank 3 - Increase of capital [Debit] Cash / bank [Credit] Owners equity 4 - Decrease in capital [Debit] Treasury Stock [Credit] Cash / bank
[Debit] Dividend expense [Credit] Dividend payable 2nd entry at time of payment Debit Dividend payable Credit Cash
journal entries can be undone by reversing the original entries by credit the debit account and debit the credit account.
[Debit] Salaries Expense [Credit] Salaries payable (balancing amount) [Credit] Deductions
The accounting journal entries for penalties and interest on taxes will go in the debit and credit columns. You debit the expense account and credit the liability account until the penalties and interest is paid.
[Debit] Theft Cash [Credit] Cash
debit cash credit bills purchase
(-) means credit amount and positive amount means debit
Basic entries are as follows: Debit Bank Cash Book account with the Cash amount received Credit Rental Income account with Cash amount received
To write off stock in accounting, the journal entries would be to debit the inventory account and credit the expense account, such as "Inventory write-off" or "Loss on inventory write-off." Additionally, if applicable, debiting any allowance for obsolete or damaged inventory account and crediting the inventory account would be necessary. The total debit amount should equal the total credit amount in the journal entry.
Debit FICA Tax payable Credit Cash / bank
Example of journal entries are as follows: 1 - Start of business [Debit] Cash /bank / goods [Credit] owners equity 2 - Purchase of asset [Debit] Asset account [Credit] Cash / bank 3 - Increase of capital [Debit] Cash / bank [Credit] Owners equity 4 - Decrease in capital [Debit] Treasury Stock [Credit] Cash / bank
Debit the Monkey Credit the Giraffe
Debit Interest Expense and Credit Bond Payable.