[NineFingers]

So I have this question in my accounting class that's asking me to chart account classification and normal balance as debit or credit. I understand the classification, I'm not sure how to determine if its debit or credit(left or right). My normal understanding of debit and credit is decrease and increase however in the book, it states that debit and credit simply means left or right. How do I determine if its one or the other??? I've read, and can't get this explanation.
TYPE OF ACCOUNT
STOCKHOLDERS EQUITY
NORMAL BALANCE
(increases balance)
DEBIT or CREDIT

 

[MTB_Rob_NC]

Your understanding is incomplete, you have to remember what side of the balance sheet the account lies. In this particular case you are on the liability/owner equity side, so a - balance would be an increase in stock holder's equity.


A good rule of thumb is to always follow a cash or similar transaction. If I am starting a business and I put in $100 in cash what is the entry?

Debit $100 to cash the offsetting credit would be to an equity account -$100

Eventhough it is a - it is an increase.
Make any sense?

 

[Snacks]

Eventhough it is a - it is an increase.
Make any sense?

Hahaha...

 

[reflux]

Yup, divide the balance sheet into two parts - assets being one, liabilities and equity being the other.

Now, in regards to debits and credits, think of a T account (go to the book if you need clarification). A debit on a T a/c is on the left, that's it. A credit on a T a/c is on the right, that's it.

Back to the balance sheet. Assets have a normal debit balance. What Rob said, to increase an asset account, you "debit" it. On the other side of the balance sheet (liab and equity), you "credit" the accounts to increase them.

**It all comes down to thinking of debits and credits not as + or -, but as left and right**

 

[MTB_Rob_NC]

Hahaha...

are you e-stalking me?

 

[Snacks]

are you e-stalking me?

Yep! neaky:

 

[BillT]

Basically, for assets a normal balance would be a debit and a normal balance for liabilities and OE is a credit. If you had a debit balance of say $100 for accounts payable (which would indicate you were owed $100 instead of owing a $100) it should be reclassed to a $100 debit balance for in the Accounts Receivable account.

 

[NineFingers]

Your understanding is incomplete, you have to remember what side of the balance sheet the account lies. In this particular case you are on the liability/owner equity side, so a - balance would be an increase in stock holder's equity.


A good rule of thumb is to always follow a cash or similar transaction. If I am starting a business and I put in $100 in cash what is the entry?

Debit $100 to cash the offsetting credit would be to an equity account -$100

Eventhough it is a - it is an increase.
Make any sense?

HMM..., I'M Re-reading this, and got it for the most part, I'm just having a hard time with some of these categories. I'm trying to print screen what I've got so far and reduce it for this site only I can't seem to get it small enough, got anny suggestions for MS picture it 7.0?

 

[RhinofromWA]

I suggest some T accounts. I hated them in school but if you are finding the Dr/Cr part confusing this might help you relieve your strife.

I hope they introduced you to "T" accounts already.

Assets = Liabilities + Equity

Make a bunch of large "T"s and put "cash" over one and "Stockholders Equity" above the other.

Double entry accounty works because it keeps the equation above balanced. Record an investment in the entity by increasing the cash account (Dr the account) and increasing the Equity account (Cr the account) If you Debited both account your equation would not be ballanced you would be doubled up on the Dr side.



Work with it on paper a couple times and see if you can see it visually. Or just right the entry out.

(edit: stupid columns wouldn't line up....let's see if this works)
.................................DR..........Cr
Cash.........................$100
......Equity...............................$100

If you Dedited both accounts you would have $200 in the Dr column and $0 in the Cr column. You are not in balance....a carnal sin of an accountant.

 

[skyst3alth]

I just got a 95 on my accouting exam...go me!

-Any increase in assets should be debited
-Any decrease in assets should be credited
-Any increase in Liabilities and S/E should be credited
-Any decrease in Liabilities and S/E should be debited
-Any increase in expenses should be debited
-Any increase in revenue/sales should be credited
-Any increase in dividends/withdrawls should be debited

Assets

-Cash
-Accounts Recievable
-Notes Recievable
-Office Supplies
-Prepaid Insurance
-Prepaid Rent
-Inventory
-Office Equipment
-Computers
-Cars
-Trucks
-Building
-Land
-Copyright
-Brand Name

Liabilities

-Accounts payable
-Notes payable
-Mortage payable
-Unearned fees
-Taxes payable

Stockholders Equity

-Prefferred Stock
-Common Stock

Expenses

-Salaries Expense
-Rent Expense
-Advertising Expense
-Insurance Expense
-Etc. Etc. (anything ending with 'expense')

That should get you started...

-Adam

 

[MTB_Rob_NC]

are you e-stalking me?

Yep! neaky:

Nice, I always wanted one.

 

[reflux]

Nice, I always wanted one.

You two should get an e-room and leave us out of it.

 

[NineFingers]

OK, I found a chart for the major account categories, so this helps me answer my question, but I would like to understand the concept of debit(left) and credit(right). I'm taking this class online, so I'm self teaching myself by reading as I go...this concept doesn't make sense to me. I'm trying, this is more of a memorizing thing rather than an understanding isn't it?

 

[MTB_Rob_NC]

I just got a 95 on my accouting exam...go me!

.....Expenses

-Salaries Expense
-Rent Expense
-Advertising Expense
-Insurance Expense
-Etc. Etc. (anything ending with 'expense')

That should get you started...

-Adam

Expenses don't belong on the balance sheet. :eviltongu See if you would of had the 's do your home work you coulda gotten a 100.

 

[MTB_Rob_NC]

You two should get an e-room and leave us out of it.

I tried, I was e-denied. :mumble:

 

[Morryjg]

I hated accounting........so what do I end up doing for a living? Supporting accounting software.

 

[skyst3alth]

Expenses don't belong on the balance sheet. :eviltongu See if you would of had the 's do your home work you coulda gotten a 100.

Bah, well this isn't just for a balance sheet, it's in general.

I got 5 points off for doing a percent wrong. I get the whole thing right and then **** up trying to take 40% of an invoice.

-Adam

 

[RhinofromWA]

Expenses don't belong on the balance sheet. :eviltongu See if you would of had the 's do your home work you coulda gotten a 100.

I am not seeing what you mean.

-Office Supplies
-Prepaid Insurance
-Prepaid Rent
-Inventory
-Office Equipment
-Computers
-Cars
-Trucks
-Building
-Land
-Copyright
-Brand Name

can be considered assets.....normally people don't capitalize office suppies but if the ammount was large enough it could be treated as inventory-like account. Assets and some prepaid rent.....what am I missing? What were you eye balling?

 

[Yossarian]

Mods, please move this thread to the accounting forum, or does it belong in the homework forum.

 

[Snacks]

I suggest some T accounts. I hated them in school but if you are finding the Dr/Cr part confusing this might help you relieve your strife.

I hope they introduced you to "T" accounts already.

Assets = Liabilities + Equity

Make a bunch of large "T"s and put "cash" over one and "Stockholders Equity" above the other.

Double entry accounty works because it keeps the equation above balanced. Record an investment in the entity by increasing the cash account (Dr the account) and increasing the Equity account (Cr the account) If you Debited both account your equation would not be ballanced you would be doubled up on the Dr side.



Work with it on paper a couple times and see if you can see it visually. Or just right the entry out.

(edit: stupid columns wouldn't line up....let's see if this works)
.................................DR..........Cr
Cash.........................$100
......Equity...............................$100

If you Dedited both accounts you would have $200 in the Dr column and $0 in the Cr column. You are not in balance....a carnal sin of an accountant.

I loved T accounts in school :love: Seriously loved 'em :heart:

I'm a total visual person so they really helped me grasp the whole debit and credit thing.

 

[I Are Baboon]

Mods, please move this thread to the accounting forum, or does it belong in the homework forum.

I thnk we need a homework forum so Ninefingers can put all his posts in there.

 

[Toshi]

homework forum.

[MMike]kids these days...[/MMike]

 

[SkaredShtles]

Accounting questions make me want to commit hara-kiri.

-S.S.-

 

[MTB_Rob_NC]

I am not seeing what you mean.


can be considered assets.....normally people don't capitalize office suppies but if the ammount was large enough it could be treated as inventory-like account. Assets and some prepaid rent.....what am I missing? What were you eye balling?

I was just busting his chops is all.

 

[MTB_Rob_NC]

I'm a total visual person

hmmmmm :evil: let me show you something.

 

[reflux]

I thnk we need a homework forum so Ninefingers can put all his posts in there.

Most def, and maybe rethink this whole online class deal.

 

[Toshi]

I was just busting his chops is all.

right, herbert

 

[NineFingers]

I thnk we need a homework forum so Ninefingers can put all his posts in there.

lol :eviltongu

 

[NineFingers]

Most def, and maybe rethink this whole online class deal.

You ain't lyin' man!!!

 

[NineFingers]

This stuff is giving me a headache... If anyone who enjoys this stuff wants some new hayes hfx 9 hd disc brakes, let me know. I've got about 25 more questions that just keep getting harder.

 

[MTB_Rob_NC]

This stuff is giving me a headache... If anyone who enjoys this stuff wants some new hayes hfx 9 hd disc brakes, let me know. I've got about 25 more questions that just keep getting harder.

Wait til you get to the present value of money and accounting for bonds and other revenue streams.


Then one day when you grow up you can be an accountant and get excited about stuff like this

http://www.ridemonkey.com/forums/showthread.php?t=111840

and spend all day on the

 

[RhinofromWA]

Wait til you get to the present value of money and accounting for bonds and other revenue streams.


Then one day when you grow up you can be an accountant and get excited about stuff like this

http://www.ridemonkey.com/forums/showthread.php?t=111840

and spend all day on the

9fingers is

 

[MTB_Rob_NC]

2 days, 2 threads 3 pages each about accounting on the ?

What is wrong with you people :evil: :evil:

 

[NineFingers]

Ok...how about $5 a question, I'll post on here and paypal you

 

[RhinofromWA]

2 days, 2 threads 3 pages each about accounting on the ?

What is wrong with you people :evil: :evil:

It is the Uprising!

Beware of accountants packing 10 keys..........

 

[reflux]

Ok...how about $5 a question, I'll post on here and paypal you

Co'mon man, bribery and cheating is no way to get through school.

Accounting. How many people wake up in the morning and say, "Booya, double-sided entry mutha******s!"? Or, how many of us do you think got (and completely understood) accounting at our first or second glance? I'd be willing to be few of us (not including me) say that crap. Point being, accounting isn't easy to understand at first. We (hopefully I'm speaking for all of us) are more than willing to try and help you learn it, but giving you the answers isn't the way to do it.

 

[MtnBikerChk]

Ok...how about $5 a question, I'll post on here and paypal you

for $5 a question, I'll guarantee you an A.

 

[MTB_Rob_NC]

for $5 a question, I'll guarantee you an A.

I'll do it for $4.75

 

[neversummersnow]

3.00 here, I'm jobless and broken so ha

 

[neversummersnow]

and between myself and my dad, we can answer any acct question you'll have...email is Brines@colorado.edu my dad has been a professor teaching cost accounting before.