Accounting Tips and Tricks

by Rekha 2009-12-08 15:34:01

* Debit means left,Credit means right

* Whenever cash is received, the Cash account is debited (and another account is credited).Whenever cash is paid out, the Cash account is credited (and another account is debited).

* To increase an asset, debit the asset account.

* To increase a liability, credit the liability account.

* To increase owner's equity, credit an owner's equity account.

* To increase revenues, credit the revenues account

* To increase expenses, debit the expense account

* For a change in assets (other than cash)—the change in the Cash account is in the opposite direction.

* For a change in liabilities and owner's equity—the change in the Cash account is in the same direction.

* On the statement of cash flows, think of the positive amounts (the numbers not in parentheses) as good for your cash balance. For example, if you don't pay your bills, that's good for your cash balance (but bad for the liability Accounts Payable which increases).

* On the statement of cash flows, think of the negative amounts (the numbers within parentheses) as not good for cash. For example, if you pay a bill, that's not good for your cash balance (but good for the liability Accounts Payable which decreases).

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