Debits and Credits

Couple of new students showed up to class. Increasing our enrollment to 12 in all. Finished off Chapter 1 by looking at simple financial statements. Tackled chapter 2 and assigned homework.

Chapter 2 introduces many fundamental accounting principals. Main ideas from lecuture include the accounting flow, double entry accounting (debits and credits), "T" accounts and the Chart of accounts.

The accounting flow is as follows:

Transaction occurs>> source document is generated (reciept or invoice)>>Transaction is recorded (journalized)>> Journalized transaction is posted to the ledger>>all ledger accounts are summarized in the trial balance.

The next concept is something that is dear to any accountants heart, Debits and Credits. Below is the model that we will use to help us journalize any transaction.

Also inherent in the model is the normal balances for each account. Normal balances are debits for assets and expenses, Credit for liabilities, owner equity, and revenue. We will do about a thousand transactions using this model and it will become second nature.

Homework assigned:

•P2-32A
•P2-33A
•P2-34A
•P2-39B
•P2-40B
•P2-41B
•P2-44

Previous homework: Read chapter 1 and 2