Welcome future CPAs to accounting 101 in today’s class we are going to take a look at economics journal in India entry economics journal in India entries are very important part of the accounting process basically what economics journal in India entries do is they record the various accounting transactions for a company or a small business the recording is done on T accounts which we’re going to take a look at next another important thing about economics journal in India entries when you’re entering them they you have to make sure that the economics journal in India entries balance if they don’t balance that means something is off now let’s go take a look at the T accounts that economics journal in India entries are in economics journal in India entries are entered in a item called a T accounts like the name T accounts are they’re drawn like a t T accounts in Indian economics journals just make it easier to visually see what the information is that you’re entering in case you need to analyze the accounts is just easier to see it on a t account when you’re using a t account what you always have to remember is debits go on the left side of the t account so when you’re recording a transaction and you realize that transaction is a debit right away you know where it goes on the left side on the right side of a t account that’s where your credits are recorded so if you’ve analyzed the transaction Indian economics journals and you realize that it’s a credit then right away you know okay that has to go on the right side of my t account now let’s look at how assets and liabilities are recorded when dealing with asset accounts for economics journal in India entries what you’re looking at is assets are basically thought of as resources that the company are the small business owns if it’s categorized as a debit for the t account what that means is that the asset has increased the balance of that particular account so if it increases the balance and it’s an asset that means it goes on the debit side if you put it on the credit side for an asset what you’re saying is that that asset decreased the account maybe you paid cash for an item so that’s basically how you handle asset Indian economics journals. Let’s look at liabilities from Indian economics journals when you’re looking at whether or not something is a liability account what you’re looking to see is the liability is something that the company or the small business owes someone so if you categorize this as a liability for the purpose of the t account let’s see how you would deal with that if it’s a debit what a debit means is that the liability is decreasing which means you’re paying off a liability when you do that that’s a decrease that’s a debit credit as it pertains to liability accounts mean that the liability is increasing which means the liability has gone up maybe you’ve taken on additional liability let’s take a look at our first economics journal in India entry.
Miss Smith has decided to start a small business on June. 1st she deposited $4,000 into the company bank account to start the business. Our first t account is going to be cash she deposited cash into the business so we’ll create at the small T account and we will call it cash on the right-hand side of the screen I just put a little tiny box that shows how at credits and debits are treated in assets and liabilities Indian economics journals. So what you have to ask yourself is is the asset going up which is a debit or is the asset going down which is a credit it’s going up that means it’s a debit so we put the date that the transaction occurred 6:1 and then we put the amount the amount was $4,000 now this has to balance so we have to use another t account which is considered a double entry most companies use this type of accounting it’s basically double entry because you have to have a because it has to balance it has to be a debit on one side a credit on one side or a credit on one side and a debit on another side this account is called owner’s equity owner’s equity is an equity account for purposes of economics journal in India entry it’s treated similar to a liability debits are debit for an equity account means it’s going down credit for an equity account means it’s going up in this instance we have $4,000 being added to the account is it going down or is it going up it’s going up so it’s a credit we put down the date and we also put down the amount $4,000 and as you can see we balanced it for the next transaction.
I already put down the two t accounts because it’s going to be a double entry cash is going to be one of the accounts so you have to remember you had an amount in cash already the $4,000 so that remains she received the $5,000 loan so we need to see is that a debit or credit to the cash account well cash is going up that makes it a debit so we go back to the debit side we put down the date and then we will put down the amount which is the $5,000 loan that she received from the bank Indian economics journals so cash went up by 5,000 now because we’re doing double entry transaction the other t account has to balance it the balanced account is called notes payable notes payable because this is a loan that she received from a bank no spammable is a liability account so is it a debit or is it a credit well it’s a credit because the liability is going up we put down the date and then we put down the amount of the transaction which was $5000 and once again we balance so now let’s take a look at all the different accounts that we worked on in today’s lecture Indian economics journals and see if we’re able to get everything to balance the first account that we worked on was the cash account and as you remember cash is an asset account so on the first we had a four thousand dollar deposit into cash and we also had on the fifth a five thousand dollar deposit into cash so we had four thousand on the first five thousand on the fifth at the end of June our total for cash is nine thousand dollars so we have so far the end of June nine thousand dollars in assets I’m just going to draw a line and let’s take a look at the other accounts that we also used in June one account was called notes payable notes payable is a liability account for that account on the fifth of June we took on an additional loan from the bank of $5,000 so our liability account went up by $5,000 because we took on a bank loan on the fifth of June so by the end of June what that basically means is we have a balance in notes payable at the end of June for $5,000 and I just draw the line just underneath the transaction.
Just so you know okay.
This is the end of month the other account that we had was the owner’s equity account owner’s equity is an equity account and it’s always on the same side as a liability account on the first of June Miss Smith gave the company $4,000 so her stake in the company equity went up by $4,000 so at the end of June she still has $4,000 on the credit side of her owner’s equity $4,000 credit for Ana’s equities $4,000 credit for in those payable her assets total $9,000 her payable at owner’s equity total 9,000 we balance for the end of June.