Here is the YT Playlist Reference (https://www.youtube.com/playlist?list=PLRhH9w2eNxdPkaxcNGrUJrDyCAsDkRVoX)
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Official Account Types
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For Beginners
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1. Assets
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1. Assets
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2. Liabilities
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2. Liabilities
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3. Capital/Equity
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3. Capital/Equity
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4. Investments by Owners
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4. Revenues
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5. Distributions to Owners
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5. Expenses
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6. Revenues
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7. Expenses
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8. Gains
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9. Losses
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10. Comprehensive Income
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Assets
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= Liabilities + Owner's Equity
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Computation for Total Owner's Equity
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Beginning Capital
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(+) when Owner transfers Money from Personal Bank Account to a Business Account (Company Name, Capital)
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Income/ Revenues
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(+) will ultimately INCREASE Capital
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Expenses
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(-) will ultimately DECREASE Capital
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Specific Account Types
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Classification
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Accounts Payable
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Liability
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Cash
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Asset
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Notes Receivable
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Asset
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Equipment
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Asset
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Company Name, Capital
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Capital/Equity
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Supplies Expense
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Expense
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Building
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Asset
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Prepaid Rent
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Asset
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Fees Earned
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Income/Revenue
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Office Equipment
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Asset
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Miscellaneous Expense
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Expense
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Common Stock
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Capital/Equity
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Service Income
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Income/Revenue
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Unearned Fees
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Liability
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Supplies
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Asset
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Accounts Receivable
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Asset
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Prepaid Expenses
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Asset
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Mortgage Payable
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Liability
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Company Name, Drawing
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Capital/Equity
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make Seperate Computations for Each Specific Account Type (ex. Cash, Accounts Receivable, Supplies, Rent Expense and etc.) in the form of T-Accounts to Tally the Total of Each Account
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the Debit and Credit of Each T-Account must Balance each other out
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Debits
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money Taken from your account to Cover Expenses
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Credits
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money Coming Into your account
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KEEP IN MIND: The Debit and Credit Entry of Each Specific T-Account depends on their Primary Classification which are as follows
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Primary Classification of Accounts
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Dr.
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Cr.
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1. Assets (A)
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(+)
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(-)
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Cash or things like Land, Equipment, or Business Vehicles that could be CONVERTED into Cash
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2. Liabilities (L)
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(-)
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(+)
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Debts you owe an individual or other businesses (ex. Accounts Payable, Notes Payable, Loans, Unearned Revenue and etc.)
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3. Capital/Equity (C)
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(-)
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(+)
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this is the Beginning Capital + Income - Expenses
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also Owner's Equity = Assets - Liabilities
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4. Income/Revenues (I)
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(-)
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(+)
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Cash earned through Sales (INCREASES CAPITAL)
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5. Expenses (E)
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(+)
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(-)
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what you Spend money on to Operate the Business (DECREASES CAPITAL)
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