logo
g Text Version
Beauty & Self
Books & Music
Career
Computers
Education
Family
Food & Wine
Health & Fitness
Hobbies & Crafts
Home & Garden
Money
News & Politics
Relationships
Religion & Spirituality
Sports
Travel & Culture
TV & Movies

dailyclick
Bored? Games!
Nutrition
Postcards
Take a Quiz
Rate My Photo

new
Houseplants
Romance Movies
Creativity
Family Travel
Southwest USA
Irish Culture
Home Finance


dailyclick
All times in EST

Full Schedule
g
g Accounting Site

BellaOnline's Accounting Editor

g

Rules of Debit and Credit & Journal Entries

Guest Author - Consuelo Herrera, CAMS, CFE

The very first step in classifying information for accounting purposes is to understand the normal balance of an account. Journal entries are prepared following the guidelines for each type of account.

The balance sheet accounts are: Assets, Liabilities, and Capital. An account's normal balance appears on the side of the account where it increases, whether debit or credit, that's the side where its balance is positive. Assets are called debit-balance accounts because their balance increases with a debit. Liabilities are called credit-balance accounts because their balance decreases with a credit.

Sometimes accounts have a balance that is not a normal balance, part of the reconciling process is to identify these balances and determine the reason that generated that balance and make it correct. For example, when a checking account is overdrawn, it has to be corrected by making an entry that transfers that short-term liability to where it belongs in this case to Liabilities where the normal balance is a credit.

The normal balances of accounts are as follows:
Assets: Debit
Liabilities: Credit
Owner's Equity: Overall, credit. It is important to keep in mind that Owner's Equity is the result of adding to Capital the Revenues and Subtracting the Withdrawals and Expenses.
Capital: Credit
Withdrawals: Debit
Revenues: Credit.

In summary:
Assets: Normal balance is debit
Liabilities: Normal balance is credit
Owner’s Equity: Normal balance is credit
Revenues: Normal balance is credit
Expenses: Normal balance is debit.

A journal It is a chronological record of a business’ transactions. The Journalizing process has four steps:
  1. Identify the transactions and its data.

  2. Identify each account affected by the transaction and classify each account by type

  3. Determine whether each account has increased or decreased by the transaction. Keep in mind the rules of debit and credit to determine whether to debit or credit the account

  4. Enter the account into the journal, including a brief explanation for the journal entry.


This site needs an editor - click to learn more!

Add Rules+of+Debit+and+Credit+%26+Journal+Entries to Twitter Add Rules+of+Debit+and+Credit+%26+Journal+Entries to Facebook Add Rules+of+Debit+and+Credit+%26+Journal+Entries to MySpace Add Rules+of+Debit+and+Credit+%26+Journal+Entries to Del.icio.us Digg Rules+of+Debit+and+Credit+%26+Journal+Entries Add Rules+of+Debit+and+Credit+%26+Journal+Entries to Yahoo My Web Add Rules+of+Debit+and+Credit+%26+Journal+Entries to Google Bookmarks Add Rules+of+Debit+and+Credit+%26+Journal+Entries to Stumbleupon Add Rules+of+Debit+and+Credit+%26+Journal+Entries to Reddit




Pillars of Accounting Information
Accounting Information Systems (AIS) and Fraud
Accountants Miusing Key Positions
RSS
Related Articles
Editor's Picks Articles
Top Ten Articles
Previous Features
Site Map


For FREE email updates, subscribe to the Accounting Newsletter


Past Issues


print
Printer Friendly
bookmark
Bookmark
tell friend
Tell a Friend
forum
Forum
email
Email Editor


Content copyright © 2014 by Consuelo Herrera, CAMS, CFE. All rights reserved.
This content was written by Consuelo Herrera, CAMS, CFE. If you wish to use this content in any manner, you need written permission. Contact BellaOnline Administration for details.

g


g features
Archives | Site Map

forum
Forum
email
Contact

Past Issues
memberscenter


vote
Poetry
Daily
Weekly
Monthly
Less than Monthly



BellaOnline on Facebook
g


| About BellaOnline | Privacy Policy | Advertising | Become an Editor |
Website copyright © 2014 Minerva WebWorks LLC. All rights reserved.


BellaOnline Editor