Module 7 Flashcards
The concept of the equation must always be equal. The left side must be equal to the right side of the equation.
Duality Concept
Assets =
Liabilities + Equity
The basic summary device of accounting is WHAT.
The Account
A detailed record of the increases, decrease and balance of each element that appears in an entity’s financial statements.
Account
The simplest form of the account is known as
T” account because of its similarity to the letter T.
As income increases, equity WHAT
increases
As expense increases, equity WHAT
decrease
The basic tool of accounting
the accounting equation.
The left side of the equation shows WHAT
how much the business owns,
the right side of the equation shows WHAT
how much resources do the outside creditor and owner supplied to the business
Accounting is based on WHAT system which means that the dual effects of business are recorded.
a double-entry system
[DEBIT OR CREDIT] [+ OR -]
ASSETS
+DEBIT, -CREDIT
[DEBIT OR CREDIT] [+ OR -]
EXPENSE
+DEBIT, -CREDIT
[DEBIT OR CREDIT] [+ OR -]
DRAWING
+DEBIT, -CREDIT
[DEBIT OR CREDIT] [+ OR -]
LIABILITIES
-DEBIT, +CREDIT
[DEBIT OR CREDIT] [+ OR -]
CAPITAL
-DEBIT, +CREDIT
[DEBIT OR CREDIT] [+ OR -]
REVENUE
-DEBIT, +CREDIT
An economic occurrence that causes changes in an enterprise’s assets, liabilities, and/or equity.
accounting event
A particular kind of event that involves the transfer of something of value between two entities.
transaction
When a transaction causes assets, expenses, or drawing to increase.
To debit the assets, expenses, or drawing account.
When transaction causes assets, expenses, or drawing to decrease.
We have to credit such assets, expenses, or drawing account.
[WHAT MODEL?]
Increase in asset, increase in capital investment
MODEL NO. 1
[WHAT MODEL?]
Increase in asset, increase in capital (revenue)
MODEL NO. 2
[WHAT MODEL?]
Increase in asset, increase in liabilities
MODEL NO. 3
