Financial Accounting Flashcards


Therefore, you will debit gas expense. Let’s look at the journal entries for Printing Plus and post each of those entries to their respective T-accounts.

The in this Cash account is a debit of $24,800. Having a debit balance in the Cash account is the normal balance for that account. The following are selected journal entries from Printing Plus that affect the Cash account. We will use the Cash ledger account to calculate account balances.

Terms Similar to Accounting Equation

The layout and step-by-step approach make it easy to follow and understand. has become easier and the block I have had regarding accounting is progressively dissipating.

These retained earnings are what the business holds onto at the end of a period to reinvest in the business, after any distributions to ownership occur. One tricky point to remember is that retained earnings are not classified as assets. Instead, they are a component of the shareholders’ equity account, placing it on the right side of the accounting equation. Another component of stockholder’s equity is company earnings.

Owner’s Equity

The is placed on the debit side of the Accounts Receivable T-account underneath the January 10 record. Service Revenue has a credit of $1,200. The record is placed on the credit side of the Service Revenue T-account underneath the January 17 record. On this transaction, Cash has a debit of $5,500. This is posted to the Cash T-account on the debit side beneath the January 17 transaction.

On January 12, there was a credit of $300 included in the Cash ledger account. Since this figure is on the credit side, this $300 is subtracted from the previous balance of $24,000 to get a new balance of $23,700. The same process occurs for the rest of the entries in the ledger and their balances. The final balance in the account is $24,800. You can see at the top is the name of the account “Cash,” as well as the assigned account number “101.” Remember, all asset accounts will start with the number 1.

Not All Transactions Affect Equity

The company has a liability to the customer until it provides the service. The Unearned Revenue account would be used to recognize this liability. This is a liability the company did not have before, thus increasing this account.