pdf <\/a>format for a printable version.)<\/p>\n\n
Step 1<\/b>: \u00a0Pick ONE account that is affected by this transaction<\/p>\n
Step 2<\/b>: \u00a0Is this account you picked in Step 1 INCREASING or DECREASING?<\/p>\n
Step 3<\/b>: \u00a0What type of account is this?<\/p>\n
CHOICES<\/p>\n
\n- Assets<\/b> \u2013 something that has future economic benefit \u2013 Cash, Accounts Receivable, Inventory, Prepaid Insurance, Equipment, etc.<\/li>\n
- Liabilities<\/b> \u2013 a debt owed to others \u2013 Accounts Payable, Unearned Revenue, Notes Payable, Bonds Payable, Long-term Mortgage Payable<\/li>\n
- Equity<\/b> \u2013 Common Stock, Retained Earnings<\/li>\n
- Revenues<\/b> \u2013 Sales Revenue, Service Revenue, Sales<\/li>\n
- Expenses<\/b> \u2013 Cost of Goods Sold, Salaries Expense, Insurance Expense<\/li>\n
- Dividends<\/b> \u2013 these are dividends that the company has declared and has, or will, pay to its stockholders<\/li>\n<\/ul>\n
Step 4<\/b>:\u00a0 Combine your answer from Step 2 and Step 3 to find whether you DEBIT or CREDIT the account you identified in Step 1<\/p>\n\n\n\n| Type of account<\/b><\/td>\n | How to INCREASE<\/b><\/td>\n | How to DECREASE<\/b><\/td>\n<\/tr>\n\n| Assets<\/td>\n | Debit<\/td>\n | Credit<\/td>\n<\/tr>\n | \n| Liabilities<\/td>\n | Credit<\/td>\n | Debit<\/td>\n<\/tr>\n | \n| Equity<\/td>\n | Credit<\/td>\n | Debit<\/td>\n<\/tr>\n | \n| Revenues<\/td>\n | Credit<\/td>\n | Debit<\/td>\n<\/tr>\n | \n| Expenses<\/td>\n | Debit<\/td>\n | Credit<\/td>\n<\/tr>\n | \n| Dividends<\/td>\n | Debit<\/td>\n | Credit<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Repeat Steps 1 through 4 for the OTHER account in this transaction<\/p>\n Remember:<\/p>\n \n- Total debits in a journal entry (transaction) must equal the total credits in that transaction<\/li>\n
- You need at least one debit and one credit for every journal entry<\/li>\n
- Debits are on the left, credits are on the right<\/li>\n<\/ul>\n<\/div>\n\n\t\t\t
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