Core Essentials Flashcards
What does DEAD stand for?
Debit
Expense
Asset
Drawings
Decrease in liabilities
What does CLIC stand for
Credit
Liability
Income
Capital
Decrease in Assets
What is an Expense?
Rent
Wages
purchases
What is an asset?
Cash
Receivables
Fixtures and fittings
what is a drawing?
Decrease in capital
what is a liability?
payables
accruals
what is income?
sales
interest receivables
What is capital
liability owed to the owners of the business
what is a decrease in liabilities
making a payment to a supplier
what is a decrease in asset?
customer pays us so receivables are reduced
What is a Receivable?
expected to receive
what is a payable
expected to pay
Cash
business GAINING = DEBIT
Asset (cash)
business LOSING = CREDIT
Asset(cash)
What is it called when a business buys goods?
Purchases (an expense) increases
Dr Purchases $ X
What if a business buys something on credit
Cr Payables $X
Liability (payables) increases
alongside Expenses (purchases) incresing
What if a business sells good
Sales (Income) increases
Cr Sales $ x
What if a business sells good for cash
Asset (cash) increases
Sales (income) increases
What if a business sells goods for credit
Asset(receivables) increases
S
What if a credit customer pays the business
Asset (cash) increases
Asset (receivables) decreases
Why is Income on the Credit side?
By crediting the income account, you are acknowledging that the business has earned revenue
which increases the overall equity of the business. This is why income is classified as a credit in accounting.
