Account classification and Normal balance
The normal balance for Drawings, Expenses, Assets.
What is Debit?
Something you own
What is an asset?
Assets = Liabilities + Owners Equity
What is the accounting equation?
The only English word to contain three sets of double letters back-to-back
What is bookkeeping?
Changes to the accounting equation.
What is a transaction?
Normal balance for Liabilities, Revenue, owners equity(Capital)
What is Credit?
Something that you owe
What is a liability?
Assets = Liabilities + Owners Equity + Revenue - Expenses
What is the extended accounting equation?
Ancient accountants used these to keep track of animals and grain.
What are Clay tokens?
Cash is received for services.
What is revenue?
Classified as an asset, and the normal balance of the classification is a debit.
What is Accounts receivable, and its normal balance?
When the owner invests their money into the business.
What is capital?
When two sides of the equation are affected. One with credit and the other with debit.
What is one side increases while the other side decreases?
Comes from the Latin words ‘debitum’ and ‘creditum’.
What are debits and credits?
Cash is received on an account for Bob's Buildings. The following two accounts are affected.
What is Accounts receivable and Cash?
The price that the company has to pay for goods/services to operate the business. What is the normal balance of this classification?
what is an expense? Debit is the normal balance for an expense.
The amount of the business that the owner(s) actually own.
What is Owners equity?
The two affected accounts are opposite of each other (one decreases, and the other increases)
What happens when the two accounts affected are on the same side?
The person who for the past six years has served as the right-hand man for Elon Musk, handling the fortune and whimsies of the world's richest person.
Who is Jared Birchall?
Bought supplies on an account. The following two accounts are affected.
What is Supplies and Accounts payable?
what is a drawing?
When the owner(s) take money out of the businesses account for personal use.
What is drawing?
Dual entry system OR Double entry system.
What the accounting equation is referred to as?
The Italian mathematician that formulated a basic accounting equation formula in 1494 in his work "A Treatise on Accounts and Records."
Who is Luca Pacioli?
When someone pays their storage buildings rent on an account.
What is Expense and accounts payable?