As we learned during the first week of the class, we need financial statements to report on a business financial situation. To prepare these statements companies keep records of day to day transactions on individual accounts and report (post) them into accounting records called journals (Easton, Halsey, McAnally,Hartgraves & Morse, 2010). When a business transaction occurs at least two of these individual accounts are affected and its changes are posted in the mentioned journal. One account will present an increase while the other one will present a decrease. Debits and Credits are accounting terms to identify these changes and are represented at each side of a T account which is an illustration of the account’s balances. According to Easton et al., the accounting equation provides us with a convenient way to remember which side of the T account records increases and which side records decreases: Assets= Liabilities + Equity. With that in mind we can say that since Assets are on the left side of the equation an increase on this
This is the end of the preview.
access the rest of the document.