ACCOUNTING ENHANCEMENT TYPES AND EFFECTS OF TRANSACTIONS

(1.) Source of Assets – An asset accounts increases

ACCOUNT TITLE and a corresponding claims (liabilities and owner’s
equity) account increases.
LEFT SIDE/ RIGHT SIDE Increase in Assets = Increase in Liabilities
DEBIT SIDE CREDIT SIDE Increase in Assets = Increase in Owner’s Equity

ACCOUNTING EQUATION: (2.) Exchange of Assets – One asset account increases

Assets= Liabilities + Owner’s Equity and another asset account decreases
Increases in one Asset = Decreases in other asset
DEBITS AND CREDITS- THE DOUBLE ENRTY SYSTEM
DEBIT (Dr. Debere) CREDIT (Cr. Credere) (3.) Use of Asset – An asset account decreases and a
(1.) An account is debited (1.) An account is corresponding claim (liabilities or equity) account
when an amount is credited when an amount decreases.
entered on the left side is entered on the right Decrease in Assets = sx
of the account side of the account.
(2.) Increases in assets (2.) Decreases in assets
(3.) Decreases in (3.) Increases in liabilities
liabilities and owner’s and owner’s equity
equity

INCOME STATEMENT ACCOUNTS

Debit for decreases in Credit for increases in
owner’s equity owner’s equity
EXPENSES INCOME
Debit (+) Credit (-) Debit (-) Credit (+)
INCREASES DECREASES DECREASES INCREASES

ACCOUNTS

Increases in (AE +) Decreases in (LON - )

Assets Liabilities
Expenses Owner’s Capital
Income
Decreases in
Liabilities Increases in
Owner’s Capital Assets
Income Expenses

NORMAL BALANCE OF AN ACCOUNT

DEBIT CREDIT
Assets Liability
Owner’s Withdrawal Owner’s Capital
Expense Accounts Income’s Accounts