Journal Entries Refresher on…

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.

• + - - +

Dual Skill

• To do a journal entry, you need to know

• What accounts are moving/impacted
• How to classify those accounts
• Asset?
• Liability?
• Equity/Revenue/Expense/Dividend?
• Where the accounts are going up or down
• 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.

• + - - +

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 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?

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

• 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?

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?

• 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?

Debits & Credits

• Assets, Exp Liabilities, Equity

• & Dividends & Revenues

• DR CR DR CR

• Incr. Decr. Decr. Incr.

• + - - +

Debits & Credits

• Assets, Exp Liabilities, Equity

• & Dividends & Revenues

• DR CR DR CR

• Incr. Decr. Decr. Incr.

• + - - +