Accounting Chapter 3 - Chapter 3 Accounting Transactions An...

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Chapter 3 Accounting Transactions An Account and Its Effects An account is an individual accounting record of the increases and decreases in a specific asset, liability, and stockholder's equity item. Each account has a title at the top to specify which account it is: * The left side is known as the debit side * The right side is known as the credit side * Also called a T account, these follow the equation Assets = Liabilities + Stockholder's Equity by making sure each transaction has debits equal to credits An account has a debit balance when the left side is greater and a credit balance when the right side is greater. * Debits increase assets, expenses, and dividends, but decrease liabilities, common stock, and revenues. * Credits do the opposite, increasing liabilities, stockholder's equity, and revenues, and decreasing assets, expenses, and dividends. The Steps in the Recording Process Using a Journal and a Ledge * The first step is to analyze each transaction to see its effect on the accounts
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