![]() ![]() Expenses – Examples: Bank Service Charges, Office Expenses, Payroll Tax Expense, Postage, Rent Expense, Wages & Salaries, etc.Income – Examples: Service Sales, Product Sales, Refunds, etc.Equity accounts can have both debit and credit balances, depending on the account. ![]() Equity – Examples: Owners Contribution, Owners Draw, Current Year Profit (or Loss), etc.Liabilities generally carry a credit balance. Liabilities – Examples: Credit Card, Loan Payable, Sales Tax Payable, etc.Assets – Examples: Bank Account, Office Equipment, Vehicles, etc.Accounts Available for Coding: As we discussed last week, a bookkeeper will take the transaction types we discussed and assign them to their respective accounts (or categories) which is what the Chart of Accounts (COA) is made up of.Consequentially these accounts decrease with debits.Ī listing of the account names that every transaction can be coded to.Consequentially these accounts decrease with credits.For example, if you buy a package of paper clips you will have a debit to expenses and a credit to your bank or credit card account. Every Transaction Has Both a Debit and Credit: Every transaction you have uses a minimum of two accounts, at least one account is debited and at least one account is credited.If you have a debit it goes on the left side of the line in the “T” and if you have a credit it goes on the right side of the line in the “T”. Basically you take a piece of paper and write a big “T”. T Accounts: In bookkeeping classes they always start with a “T” account.Simply Put: Debit = Left and Credit = Right When it comes to bookkeeping the meaning is a little different. What are debits and credits and why do they matter?Īny prior knowledge you have around debits and credits (usually associated with bank accounts and credit cards) needs to be thrown out. Now that we have a solid foundation of what bookkeeping is, we want to dig a little deeper. What Is Bookkeeping and Why Do I Need Bookkeeping For My Business? If you missed our first article check it out here: This is Part 2 in our “All About Bookkeeping” series. ![]()
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