Got my textbook today. That should be helpful. Need to leave a little earlier in the morning. Wasn’t late, but I was only a minute or two before the bell. Given past tendencies, that’s not enough margin.See Chapter 2, for Recognition Issue, Valuation Issue, Classification Issue
Most companies will keep a Chart of Accounts, a listing of all accounts typically used in the bookkeeping for that company. Accounts are numbered, and usually referred to by number. See pages 50+
Accounts in the Chart of Accounts are listed in a specific order.
Assets are listed first, in order of liquidity. For instance, Cash is generally the first account listed, as a completely liquid asset. Land or buildings are usually the last asset listed, as they are difficult to convert to cash.
Liabilities are listed second, by how quickly they will come due. For instance, Accounts Payable might be the first account listed, then salaries payable, then notes payable, then bonds payable.
Owner’s Equity is the third category, and is listed with owners capital first, and then owner withdrawals.
Revenue is the fourth category.
Expenses is the fifth category.
Accounts are generally numbered according to some internal logic, and by category; therefore, assets might be 1XX, Liabilities 2XX, and so forth.
Double Entry Bookkeeping pg 51+
Evolved from work of late-fifteenth century monk Fra Luca Pacioli. Based on the Principle of Duality, that every economic event has two aspects that counterbalance each other. In the double-entry system, every transaction must be recorded with at least one credit and one debit, which much balance each other.
T Accounts — A method of tracking and illustrating accounts. A T account chart has a T shaped line drawing, forming a title bar and two columns. The account title goes above the line. The left column is the debit column. The right column is the credit column. A T account is an abbreviated version of a ledger account. Each account an organization uses must have its own T-chart for things to balance.
To make an asset account larger in a T-Account, you debit it, putting the entry in the left column. To make an asset account smaller, you credit it, putting the entry in the right column.
To make a liability account larger, you credit it, putting the entry in the right column. To make a liability account smaller, you debit it, putting the entry in the left column.
To make a Revenue account larger, you credit it. To make it smaller, you debit it.
To make an expense account larger, you debit it. To make it smaller, you credit it.