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    Accounts have three parts: a title, a debit side, and a credit side. Debiting an account means entering an amount on the left side, while crediting an account means entering an amount on the right side. The equality of debits and credits provides the basis for the double-entry accounting system. Assets, expenses, and dividends have a normal debit balance, while liabilities, share capital, and retained earnings have a normal credit balance. The journal is the book of original entry where each transaction's debit and credit effects on specific accounts are recorded.

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    Accounts have three parts: a title, a debit side, and a credit side. Debiting an account means entering an amount on the left side, while crediting an account means entering an amount on the right side. The equality of debits and credits provides the basis for the double-entry accounting system. Assets, expenses, and dividends have a normal debit balance, while liabilities, share capital, and retained earnings have a normal credit balance. The journal is the book of original entry where each transaction's debit and credit effects on specific accounts are recorded.

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    21 views4 pages

    Financial Accounting Chapter 2 Review

    Uploaded by

    ariel4869
    Accounts have three parts: a title, a debit side, and a credit side. Debiting an account means entering an amount on the left side, while crediting an account means entering an amount on the right side. The equality of debits and credits provides the basis for the double-entry accounting system. Assets, expenses, and dividends have a normal debit balance, while liabilities, share capital, and retained earnings have a normal credit balance. The journal is the book of original entry where each transaction's debit and credit effects on specific accounts are recorded.

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    FINANCIAL ACCOUNTING

    CHAPTER 2 REVIEW
    Account: an accounting record of increases and decreases in a specific
    asset, liability or equity item.
    An account consists of three parts: 1) Account title. 2) left or Debit side. 3)
    right or Credit side.
    debiting an account is : entering an amount n the left side of an account
    crediting an account is : entering an amount in the right side of an account.

    Debit balance : when the debits exceed the credits in an account.
    Credit balance : when the credits exceed the debits in an account.
    the equality of debits and credits provides the basis for the Double-entry
    system of recording transactions.
    The normal balance of an account is on the side where an increase in the
    account is recorded.
    Assets , Expenses , Dividends ( AED) normal balance is : DEBIT
    Liabilities , Share Capital , Retained Earnings (revenue)( LSR ) normal
    balance is : CREDIT
    Expanded equation: Assets = Liabilities + Share Capital + Retained earnings
    - Dividends+ Revenue - Expenses
    journal is referred to the book of original entry. for each transaction the
    journal shows the debit and credit effects on specific accounts.
    General journal : has spaces for dates, account title and explanations ,
    references, and two amount columns.

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