Debits Credits

Expenses
Liabilities

Revenue
Objectives – We will be able to:

•Define debits and credits

•List account normal balances
•Explain how debits and credits work

Bob Steele CPA, CGMA, M.S.tax 2

 Double Entry Accounting
Accounting
Equation = Balance
Sheet = Debits =
Credit
Balance Sheet Debits Credits
Assets = Liabilities + Equity
Assets Liabilities

Equity $1,000 $1,000

Bob Steele CPA, CGMA, M.S.tax 3

Accounting Equation = Debits = Credit

Bob Steele CPA, CGMA, M.S.tax 4

 Debits Credits

Bob Steele CPA, CGMA, M.S.tax 5

 Debits Credits

Assets
Liabilities
Equity

Bob Steele CPA, CGMA, M.S.tax 6

 Debits Credits
Accounting
Equation
Assets
Balance Sheet Liabilities
Equity

Equity
Income
Statement Revenue
Expenses
Bob Steele CPA, CGMA, M.S.tax 7
 Debits Credits
Accounting
Equation
Assets
Balance Sheet Liabilities
Equity

Equity
Income
Statement Revenue
Expenses
Bob Steele CPA, CGMA, M.S.tax 8
Debits Credits
Assets Liabilities & Equity

Vendor Owner

Bob Steele CPA, CGMA, M.S.tax 9

 Equity - Income Statement
Debits Credits
Expenses Revenue

Revenue - Expenses
Credits - Debits
Net Income
Bob Steele CPA, CGMA, M.S.tax 10
 Debits Credits
Accounting
Equation
Assets
Balance Sheet Liabilities
Equity

Equity
Income
Statement Revenue
Expenses
Bob Steele CPA, CGMA, M.S.tax 11
Objectives – We are now able to:

•Define debits and credits

•List account normal balances
•Explain how debits and credits work

Bob Steele CPA, CGMA, M.S.tax 12