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Unformatted text preview: The hard part is to ensure what is a credit and what is a debit. In the case of the stockholders investing in stock there was a credit and a debit. Credits are money amounts that the company owns or is owed, debits are money paid out of the company for such as rent, supplies, and salaries. Each step supported the principles of accounting as you find out exactly the monetary amounts of business transactions. Some transactions end up with the company owing money (debits) and other transactions end as assets (credit). When looking at the final financial report it is noticed that money going out is more than what is coming in it proves that the company is putting itself into debt. Both figures should be equal or there should be an excess profit if the firm is paying out less than they are taking in. JOURNALIZING, POSTING, AND PREPAIRING A TRIAL 3...
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- Spring '11