Posts Tagged ‘Liabilities’
8 Common Accounting Mistakes Small Businesses Make
Accounting errors happen from time to time and many can be avoided if you plan properly. Part of planning is knowing which errors are most common and what to do to avoid making them. This article from The Balance Small Business talks about 8 of the most common mistakes that business owners make that will…
Read MoreT-Account Example
For the image below, total Debits less total Credits equal the Account Balance. So, in the example in the image, total Debits of 2,675 less total Credits of 275 equal 2,400. This is a Debit amount since, in this example, Debits are greater than Credits.
Read MoreWhat T-Accounts do
All Debits and Credits are tracked in an Account’s T-Account. When tracked properly, it’s easy to figure out the balance of an account.
Read MoreHow T-Accounts help
Each Account has it’s own T-Account. This allows proper transaction tracking of Debits and Credits.
Read MoreAnatomy of a T-Account
A T-Account visually represents the impact transactions have on a particular account. As seen in the image, the white “T” allows space for an Account Name (at the top), Debit Side (Left), and Credit Side (Right). It’s a simple visual that helps when trying to understand the balance of an account.
Read MoreNormal Balance: Expense
The normal balance of an Expense Account is a Debit. So, if you purchased $450 worth of office supplies, it means you have a $450 Debit in the Office Supplies account.
Read MoreNormal Balance: Revenue
The normal balance of a Revenue Account is a Credit. So, if you earned $750 from selling widgets (Sales), it means you have a $750 Credit in the Sales account.
Read MoreNormal Balance: Owners’ Equity
Like Liability Accounts, the normal balance of an Owners’ Equity Account is a Credit. So, if you have $250 in Retained Earnings, it means you have a $250 Credit in the Retained Earnings account.
Read MoreNormal Balance: Liabilities
The normal balance of a Liability Account is a Credit. So, if you owed $750 to someone in the form of a Notes Payable, it means you have a $750 Credit in the Notes Payable account.
Read MoreNormal Balance: Asset
The normal balance of an Asset Account is a Debit. So, if you had $1,000 in a bank account, it means you have a $1,000 Debit in the bank account.
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