Recording Transactions Debit Credit Theory 1 In classifying the financial

Recording transactions debit credit theory 1 in

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Recording Transactions: Debit/ Credit Theory 1. In classifying the financial activity of a business, the accountant uses and Account (a record of the additions, deductions, and balances of individual assets, liabilities, revenues, expenses, and capital accounts). 2. T-Account: three parts TITLE Left Side DEBIT (charge) Right Side CREDIT 3. Mechanics of how to apply the debit/credit theory. Use the following illustration: DEBIT CREDIT Assets+Dividends+Expenses Liabilities+Capital Stock+Retained Earnings +Revenue Note: to determine the normal balance of an account, just answer the question “How is the account increased.” For example, Assets are increased by debits, therefore they have normal debit balances. Ledger: a group of accounts.
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Trial Balance: a record prepared at the end of the accounting period. It lists all ledger accounts, with their balances, entered in appropriate debit or credit columns to determine whether debits equal credits. Journal (Book of Original Entry): the initial record in which a transaction is recorded. Posting: the transfer of amounts from a journal to individual ledger accounts.
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