02.26.05
The Golden Rule of Accounting
Debits and credits must always equal one another. I totally get it…or I did, until I was given the accounting equation for which that rule applies: assets equal liabilities plus owners equity plus revenue minus expenses. A debit (which, by the way, is indicated in a T account as “Dr” just to add to the confustion)is anything that increases assets and decreases liabilities and owners equity. Recieving cash isn’t just (and not even) crediting your assets…in fact, since debiting is the only thing that can increase assets, receiving cash means you have to DEBIT your assests account and then you have to find which account under liabilities or owners equity to CREDIT.
And this is only day three of six weeks of Accounting. Jesus Christ on a cracker my mangina hurts. I think I seriously have blood coming out of my ear.
February 28, 2005 at 11:39 am
HA! Just wait till you get to DEPRECIATION! My accounting professor was not happy with my suggestion of over-insuring assets then torching them. Some people have no sense of humor.
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