Principles of Accounting I_Unit1_DB

Principles of Accounting I_Unit1_DB - balance sheet with...

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Principles of Accounting I Unit 1 Discussion Board Kregg M. Soltow 8/30/2010 American Intercontinental University When creating a transaction or a journal, the Debit and Credit admissions must be equal to each other for the journal to balance. The balance sheet is a statement of monetary position at a precise date in time. A debit entry to the balance sheet will increase the financial position of the business whereas a credit entry would decrease the financial position of the balance sheet. The income statement is a synopsis of the profit or loss for a period of time. Usually the income statement will report the trading results for 1 year. A credit entry to the income statement will increase the profit and reduce the loss for the period whereas a debit entry would reduce the profit and increase the loss for the period. Journals or transactions will often have either a Debit or Credit posted to the
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Unformatted text preview: balance sheet with the opposite entry posted to the income statement. An example of this is included in the journals below. Example journals: A. Purchase of $1000 of parts to be used in the manufacture of a motorcycle. Payment for the goods is made on receipt of the parts. Balance sheet Dr - inventory (balance sheet) - $1000 Cr - bank account - $1000 Income statement Dr - purchases - $1000 Cr - inventory (balance sheet) - $1000 B. Sale of motorcycle for $2,500 which is currently held in inventory for $1,750. Receipt for motorcycle is received upon delivery to the customer. Balance sheet Dr - bank account - $2,500 Cr - inventory (balance sheet) - $1,750 Income statement Dr - inventory (income statement) - $1,750 Cr - income - $2,500...
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This note was uploaded on 02/17/2012 for the course ITCO 101 taught by Professor Gugenhiem during the Spring '12 term at AIU Online.

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Principles of Accounting I_Unit1_DB - balance sheet with...

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