Find out more about accountingWhat are Debits and Credits?
What are Debits and Credits? “What are debits and credits?” is a common question for students. Debit and credit rules sound complicated, but debits and credits are simply the left and right sides of a ledger account. Debit is the left and credit is the right as you can see in this …
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Accounting Questions and Answers Learn the basics with these accounting questions and answers so you succeed with your accounting study.
Read MoreWhat is Accounting?
What is Accounting? “What is accounting?” is a common question for students. Accounting is a system to record finances. It then retrieves financial information so the owners can manage the business and report on performance. The double entry system process uses a debit and credit journal to record transactions in ledger accounts. Importantly, …
Read MoreSummary of the Debit and Credit Rules
Summary of the Debit and Credit Rules This is a simple summary of the debit and credit rules. Use this rule to determine which accounts to debit and credit in double entry accounting. Because the rule is based on the accounting equation, it will always apply. Use this rule where …
Read MoreThe Accounting Equation
The Accounting Equation The accounting equation is the logic behind double entry accounting or accrual accounting. To understand this logic, you need to know there are five types of transactions in the accounting process. These types of ledger accounts are Assets, Liabilities, Owners Equity, Revenues and Expenses. Because this is …
Read MoreWhat is the Accounting Process?
What is the Accounting Process? The accounting process is an organised way to record financial transactions in the ‘accounting system’. Accounting is just a system to record finances. A sophisticated accounting system was developed by an Italian mathematician called Luca Pavoli in the late 1400’s. This is what we call accrual …
Read MoreWhat are Journals?
What are Journals? What are journals? This is a common question accounting students ask when learning accounting. The difference between journals and ledgers confuses many people. The accounting process in theory is for journals to show the ledger accounts to be adjusted. Computerised accounting systems such as MYOB and Xero …
Read MoreWhat is a Trial Balance?
What is a Trial Balance? What is a trial balance? Learn how to read a trial balance. The trial balance is a list of all the ledger accounts and their balances – either debit or credit. A trial balance looks like this; The double entry system ensures that debits and credits …
Read MoreWhat is the Chart of Accounts?
What is the Chart of Accounts? The Chart of Accounts is the complete list and layout of the ledger accounts used by the business. Each ledger account has a number and this coded in order of the type of account. Different types of businesses will need a Chart of Accounts …
Read MoreWhat is a Ledger Account?
What is a Ledger Account? This is a common question for beginning accounting students. There should be a ledger account for each financial transaction type. This example shows a columnar ledger account. Accounting software packages report transaction balances using this style. (Often people learn accounting using a T account ledger …
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