Occasionally - credit but who is new to accounting may not...

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Occasionally, an account does not have a normal balance. For example, a company's checking  account (an asset) has a credit balance if the account is overdrawn. The way people often use the words  debit  and  credit  in everyday speech is not how accountants use  these words. For example, the word  credit  generally has positive associations when used  conversationally: in school you receive credit for completing a course, a great hockey player may be  a credit to his or her team, and a hopeless romantic may at least deserve credit for trying. Someone  who is familiar with these uses for 
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Unformatted text preview: credit but who is new to accounting may not immediately associate credits with decreases to asset, expense, and owner's drawing accounts. If a business owner loses $5,000 of the company's cash while gambling, the cash account, which is an asset, must be credited for $5,000. (The accountant who records this entry may also deserve credit for realizing that other job offers merit consideration.) For accounting purposes, think of debit and credit simply in terms of the left-hand and right-hand side of a T account....
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This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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