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Journal Entries: Refresher On Debits Credits Accounts

This document provides a refresher on debits and credits for journal entries. It explains that debits are on the left side of a T account and credits are on the right side. Debits and credits do not mean increases or decreases, respectively. The document then provides examples of how to record common journal entries by determining which accounts are impacted and whether a debit or credit is needed based on whether the account amount is increasing or decreasing. It emphasizes memorizing the rules for debits and credits.

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Jun Rinion Taguinod
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81 views13 pages

Journal Entries: Refresher On Debits Credits Accounts

This document provides a refresher on debits and credits for journal entries. It explains that debits are on the left side of a T account and credits are on the right side. Debits and credits do not mean increases or decreases, respectively. The document then provides examples of how to record common journal entries by determining which accounts are impacted and whether a debit or credit is needed based on whether the account amount is increasing or decreasing. It emphasizes memorizing the rules for debits and credits.

Uploaded by

Jun Rinion Taguinod
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Journal Entries

Refresher on…

Debits
Credits
Accounts
Debits & Credits
• Debits are the left of the T account.
• Debits do not mean increase.
• Debits are not “good” or “bad”.

• Credits are the right of the T account.


• Credits do not mean decrease.
• Credits are not “good” or “bad”.
Debits & Credits

Assets, Exp Liabilities, Equity


& Dividends & Revenues
DR CR DR CR
Incr. Decr. Decr. Incr.
+ - - +

If you remember this


one, the “other one” is
the reverse.
Dual Skill
To do a journal entry, you need to know
1. What accounts are moving/impacted
2. How to classify those accounts
• Asset?
• Liability?
• Equity/Revenue/Expense/Dividend?
3. Where the accounts are going up or down
4. NOW you are ready to declare debit or
credit!
Debits & Credits

Assets, Exp Liabilities, Equity


& Dividends & Revenues
DR CR DR CR
Incr. Decr. Decr. Incr.
+ - - +

Memorize this right now


Takes about 60 seconds.
Close your eyes and do it now.
Impact on accounts
• How do you show new credit
sales [accounts receivable go
up]?

• How do you reflect prepaid


insurance getting used up [go
down]?

• How do you take land you sold


off the books [no gain or loss]?

• How do you show an increase to


cash from a customer paying
their bill?
Impact on accounts
• How do you show new credit • Debit AR
sales [accounts receivable go • Credit Sales Rev.
up]?

• How do you reflect prepaid • Debit Insurance Exp


insurance getting used up [go • Credit Prepaid
down]?

• How do you take land you sold • Debit Cash


off the books [no gain or loss]? • Credit Land
• How do you show an increase to
cash from a customer paying • Debit Cash
their bill? • Credit AR
Liability Accounts
• How do you show buying
inventory on credit [accounts
payable goes up]?

• How do you reflect taxes


payable getting paid [go
down]?

• How do you show paying off an


old loan with a new loan?

• How do you show the


obligation to pay workers
after their work is complete but
not yet paid?
Liability Accounts
• Debit Inventory
• How do you show buying
inventory on credit [accounts • Credit Accts Payable
payable goes up]?
• Debit Tax Payable
• How do you reflect taxes
payable getting paid [go • Credit Cash
down]?
• Debit Old Loan
• How do you show paying off an
old loan with a new loan? • Credit New Loan

• How do you show the • Debit Salaries Expense


obligation to pay workers
after their work is complete but • Credit Salaries Payable
not yet paid?
What do you need – debit or
credit?
• Make patents go up?
• Make AP go down?
• Make Revenue go up?
• Make Expenses go up?
• Make Mortgage Loan go up?
• Make Salaries payable go down?
• Make Cash go down?
What do you need – debit or credit?
• Make patents go up? • Debit
• Make AP go down? • Debit
• Make Revenue go up? • Credit
• Make Expenses go up? • Debit
• Make Mortgage Loan go up? • Credit
• Make Salaries payable go down? • Debit
• Make Cash go down? • Credit
Debits & Credits

Assets, Exp Liabilities, Equity


& Dividends & Revenues
DR CR DR CR
Incr. Decr. Decr. Incr.
+ - - +
The key is to memorize and practice
what an increase or decrease
requires…until it is second nature.
Debits & Credits

Assets, Exp Liabilities, Equity


& Dividends & Revenues
DR CR DR CR
Incr. Decr. Decr. Incr.
+ - - +
More practice using on-line quizzes for chapter 7!
Doesn’t count towards grade but you will see the
scores so you know how you did.

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