Can anyone explain Double-entry bookkeeping in accounting?
Basically – There are two entries for each transaction. A debit and a credit. There are different sections for accounting. The balance sheet – assets (debit), liability (credit) and owners equity (the difference in the two – what the company is worth). There is the Profit and Loss statement – Sales (credit), expenses (debit) and retained earnings (profit or loss. the difference in income and expenses) Expenses and assets are on different areas of the financial statements. Assets are what you own (money, equipment, trucks, buildings) – debits. Liabilities are what you OWE (loans, bills, taxes payable) – credit. These are on the balance sheet. The difference in the two is the value of your company. Sales/income – pretty clear – these are credits, because the offset is accounts receivable (debit/asset) or cash (debit/asset). Expenses – again, pretty clear – these are debits because the offset is accounts payable (credit/liability) or a credit (lowering) of cash. Always use cash as a corne
