Rules of Debit and Credit

Lesson 10
Objectives
• Define what an account is.
• Explain what T-account is.
• Explain the rules of debit and credit on each element
of financial statements.
 DEBIT CREDIT

LEFT RIGHT

Accounts increasing in DEBIT

DR CR A D E

A + -
L - +
C - +
D + -
R - + Accounts increasing in CREDIT
E + -
L C R
Let’s analyze the below transactions:
DEBIT
DEBIT CREDIT
CREDIT
1. Cash investment by the owner Cash Capital
Office Supplies Accounts Payable
2. Purchase of office supplies on account
3. Payment of an Accounts Payable Accounts Payable Cash

4. Rendered Service to Customers, cash received Cash Service Revenue

5. Payment of expenses Expense Cash

Accounts Receivable Service Revenue
6. Rendered service to customers on account
Cash Accounts
7. Collection of Accounts Receivable Receivable
Drawings Cash
8. Cash withdrawal by the owner
Journalizing
Lesson 11
Objectives
• Define what a general journal is.
• Explain the steps in journalizing.
• Prepare journal entries.
Posting
Lesson 12
Objectives
• Define what a general ledger is.
• Explain the steps in posting.
• Execute the posting process.
 Date Description PR Debit Credit
2020
April 1 Cash 6,000,000.00
Yoon, Capital 6,000,000.00
Cash investment by the owner
Trial Balance
Lesson 13
Objectives
• Define what a trial balance is.
• Prepare a trial balance.
• Explain common errors affecting inequality of the trial
balance and its correction.