Ena
How to do journal entry (accounting) ?
I think debt and credit in journal entry are not logical. I did past exams but i hardly ever get good grade in midterm. #accounting
3 answers
Michele Van Pelt
Michele’s Answer
You have to think of it this way: a debit is anytime you are TAKING AWAY from the account. A credit is anytime you are ADDING to the account. On a balance sheet, for every account that you make a debit against, you must add a credit to another account.
Example: I have a sales rep that just turned in an expense report. He would like to be reimbursed for his expenses. They are $500.
I am going to DEBIT my cash account for $500 because I am reimbursing his travel expenses. I am going to CREDIT the travel expense account because I
need to ADD to the total amount of travel expenses the company has spent this year.
Example: I received a check from a vendor in payment for an invoice that our company sent to them. I am going to CREDIT my cash account (because I am ADDING
money to the total amount of cash in the account). I am then going to DEBIT the vendor's account (usually in alignment with an invoice number) because
I am going to TAKE AWAY from the total amount of money that they owe the company.
I hope this helped.
Gaby E. Abou Merhi
Gaby E.’s Answer
Shareholders Equity = Paid in capital + Retained Earnings (and a few other stuff)
Retained Earnings = Profit = Revenues + Costs
Shareholders Equity = Paid in Capital + Revenues - Costs
Assets = Liabilities + Paid in Capital + Revenues - Costs
(add Costs to both sides)
Assets + Costs = Liabilities + Paid in Capital + Revenues
Left side goes up with Debit, down with Credit. Right side goes up with Credit, down with Debit. Easy!
Geoffrey Mburu
Geoffrey’s Answer
Ena, here is a link that explains double entry further
https://www.accountingcoach.com/debits-and-credits/outline
All the best
Geoffrey