The bookkeeping process - Account balances

4 important questions on The bookkeeping process - Account balances

How do companies keep track of account balances?

  • Journal entries
  • T-accounts

The debit credit frame work: balance sheet

Asset: DEBIT for INCREASE
CREDIT  for DECREASE

Liabilities: DEBIT for DECREASE
CREDIT for INCREASE

Equities: DEBIT for DECREASE
CREDIT for INCREASE

The journal entry

The owner of a proprietorship invests personal cash of $20,000

Cash asset increase debit
contributed capital equity credit
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A motel writes a $1,500 check to pay its current monthly rent.

Rent expense debit
cash credit

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