Acc 107 Chapter 3

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1. T Account
• - Shaped like a T
• - Debit means Left
• - Credit means Right
• - Account Name on Top
2. Define T Account :
- Every T account has an increase side and a decrease side.

- Some accounts increase on the debit side and some accounts increase on the credit side.
3. How do you balance a T Account?
1. Foot the Debit and Credit Sides

2. Find the difference between the debit and credit totals.

3. Write Balance on side with larger total

Example:

• \$3,500 debit footing
• - \$3,130 credit footing
• ---------------------------
• \$370 balance
4. Define: Foot
To "Foot" means to Total
5. 7 Rules of Debits and Credits

Rule # 1
Asset Accounts

• + Increase on the debit
• - Decrease on the credit side
6. 7 Rules of Debits and Credits

Rule # 2
In every transaction, debits must equal credits.
7. 7 Rules of Debits and Credits

Rule # 3
Liability Accounts

• - Decrease on the debit side
• +Increase on the credit side
8. 7 Rules of Debits and Credits

Rule # 4
Capital Account

• - Decrease on the debit side
• + Increase on the credit side
9. 7 Rules of Debits and Credits

Rule # 5
Drawing Account

• + Increase on the debit Side
• - Decrease on the credit side

[Just Like Asset Acount]
10. 7 Rules of Debits and Credits

Rule # 6
Revenue Accounts

• - Decrease on the debit side
• + Increase on the credit side

[Just Like Liability & Capital Accounts]
11. 7 Rules of Debits and Credits

Rule # 7
Expense Accounts

• +Increase on the debit side
• - Decrease on the credit side

[Just Like Asset Account]
12. The Trial Balance
• - A listing of all accounts and their balances
• - A totaling of debits and credits
• - Is proof that debits equal credits and that the accounting equation has remained in balance.
• -Used as an aid in preparing financial statements.
• 1. Name of the company
• 2. Title of the document - " Trial Balance"
• 3. Date of the trial balance
14. Trial Balance Accounts?
• All asset accounts are first
• Liabilites are shown next
• Now the owner's equity accounts
• Then the revenue account
• Finally, the expense account

Debits=Credits

Card Set Information

 Author: natalya19 ID: 130457 Filename: Acc 107 Chapter 3 Updated: 2012-01-25 10:18:28 Tags: Accounting 107 Folders: Description: College Accounting Chapter 3 Show Answers:

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