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Slide Notes

As you have seen when setting up your T-accounts There is a left side and a right side.

Accounting theory is based entirely on the understanding that every account has two sides.

These sides have names that are used universally in the accounting profession.
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Debit Credit Theory

Published on Oct 30, 2018

Provides an introduction to the double entry system of accounting known as debit credit theory.

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1.

Debit Credit Theory

David Dickinson 
As you have seen when setting up your T-accounts There is a left side and a right side.

Accounting theory is based entirely on the understanding that every account has two sides.

These sides have names that are used universally in the accounting profession.
Photo by Two Paddles Axe and Leatherwork
2.

Debits & Credits

  • Debit (Dr)
  • The word associated with the left side of the account
  • Credit (Cr)
  • The word associated with the right side of the account
Asset accounts have DEBIT values

Liability and capital accounts have CREDIT values.

Remember the opening values of these accounts follow the same conventions of the balance sheet

Assets - Left side
Liabilities - Right side
Equity - Right side
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3.

Untitled Slide

For each type of account record increases on its beginning value side.

Record decreases on the other side of the account.

4.

Double Entry System of Accounting

  • As each transaction is completed it balances within itself
  • Debits = Credits
  • Assets = Liabilities + Equity
The balancing of the debits and credits is why the system is considered a double entry system of accounting.

The fundamental accounting equation must also continue to stay in balance.
Photo by Faye Cornish
5.

Untitled Slide

Accounting Rap Time!

Link to Video: https://youtu.be/j71Kmxv7smk

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David Dickinson

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