Statement of Financial Position Account titles (Permanent Accounts)

Liability
 Income Statement Accounts (Temporary Accounts)

DEBITS AND CREDITS- THE DOUBLE ENTRY SYSTEM

 Accounting is based on a double-entry system which means that the dual effect of a
business transaction is recorded.
 A debit side entry must have a corresponding credit side entry.
 Each transaction affects at least two accounts.
 The total debits for a transaction must always equal the total credits.
 An account is debited when an amount is entered on the left side of the account and credited when
an amount is entered on the right side. The abbreviations for debit and credit are Dr. and Cr.,
respectively.