Chapter 3 Outline - Kimmel

Accounting: Tools for Business Decision Making

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Double Entry Accounting Transactions are recorded in a formal accounting system using Double Entry Accounting . Rules: 1. Every transaction affects at least 2 accounts. a. Account - an individual accounting record of increases and decreases in a specific asset , liability , stockholders' equity, revenue, or expense item. The basic storage unit of accounting information. b. An account consists of three parts: (1) the title of the account, (2) a left or debit side, and (3) a right or a credit side. 2. Every transaction must be recorded with at least one debit and at least one credit. 3. The dollar amounts of the debits must always be equal to the dollar amounts of the credits. 4. The accounting equation always remains in balance. Debits and Credits: Debits only mean left side and credits only mean right side. Do not think of debits and credits as good or bad. Debits and credits can be illustrated with a “T” account. See page 108.
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Chapter 3 Outline - Kimmel - 1 Chapter 3 Double Entry...

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