15. Accounting basics Flashcards
1
Q
What is the basic accounting equation?
A
A = L + E Assets = Liabilities + Equity
(D E A = L E R)
dividends, expenses, assets = liabilities, equity, revenue)
2
Q
What does in left side of T account? What goes on right side?
A
Left = Debit Right = Credit
3
Q
Does debit side increase or decrease for assets?
A
Increase. You own more!
4
Q
Do liabilities decrease or increase the debit side?
A
Decrease
5
Q
Do assets decrease or increase the credit side?
A
Decrease.
6
Q
Does every transaction affect at least 2 accounts?
A
yes
7
Q
How do you check if your T-diagrams are balanced?
A
Debits = Credits
8
Q
Explain the picture.
A
The assets are broken down into revenues - costs&expenses
The equities are broken down into contributed capital and retained earnings
