Note: OK, properly speaking, I’m a beginner in accounting discipline.

And it’s still very hard for me to understand this “Credit and Debit” thing. All of your corrections are more than welcome.

Income Statement
Net Income Revenues/Gross Profit Expenses

CREDIT
Explanation: There is no account under Net Income. Net Income is a result of deduction of Expenses from Revenues. Warning: It is also recorded in Trial Balance with a trick. Exception:

DEBIT
Mostly record Operating Expenses:

=

Cost of Goods sold is considered as expense. It is reported under Revenues (being subtracted) to be able to determine Gross Profit. On the contrary, some people report it under the Expenses.

-

2 things to remember: 1. Depreciation expenses are here 2. But Accumulated Depreciation are not here. They are under BS.

Accounts which are in Accounts which are in Accounts which are in

are credited when increases. (opposite is true, debited when decreases) are debited when increases. (opposite is true, credited when decreases) are the result accounts without any need to be credited or be debited.

Exception: In the TRIAL BALANCE, the Net Income or Net Loss sometimes (“sometimes” here means some systems require it, some others do not) shows its opposite nature under the Income Statement Column and shows its true nature under the Statement of Return Earnings Column.

Statement of Retained Earning
End. Retained E. Beg. Retained E. Net Income Dividends

CREDIT
Its result also appears on the Balance sheet. Warning: In some company, they call it Capital Stock, calculation is tricky.

DEBIT
+
The amount is reported from the Income Statement. Tips: In French Plan Comptable Général, there is 1 Compte de Résultat.

=

The number is reported from last Year. Warning: In Trial Balance, it normally Carries a CREDIT balance

-

It is not shown in the Balance Sheet, even if it is also under the categories of Owner’s Equity

Accounts which are in Accounts which are in Accounts which are in

are credited when increases. (opposite is true, debited when decreases) are debited when increases. (opposite is true, credited when decreases) are the result accounts without any need to be credited or be debited.

Exception: In the TRIAL BALANCE, the Net Income or Net Loss sometimes (“sometimes” here means some systems require it, some others do not) shows its opposite nature under the Income Statement Column and shows its true nature under the Statement of Return Earnings Column. • There is one more trick about the Ending Retained Earning (Let’s call it “ERE”) and the Beginning Retained Earning (Let’s call it “BRE”). The ERE of the current year will become the BRE next year. The ERE next year will become the BRE of the year following that next year. So at first, each ERE is just a result account ( ). But next, it will carry a credit balance ( ) because it already changes into BRE.

Balance Sheet
ASSETS LIABILITIES OWNER’S EQUITY

DEBIT
Tangible Assets Current Assets Non-current Assets

CREDIT
Current Liabilities Capital

CREDIT
+

=
Non-current Liabilities

Retained Earning

Intangible Assets

Accounts which are in Accounts which are in

are credited when increases. (opposite is true, debited when decreases) are debited when increases. (opposite is true, credited when decreases)

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