For double-entry accounting, every transaction on a balance sheet and income statement needs to have at least a debit and a credit. Different types of accounts have a debit or credit balance depending on what type of account they are. Simple, right?
It’s no surprise that even people who have been in business for a while go looking for an accounting cheat sheet to help them understand – a sort of debits and credits cheat sheet to remind them which is what. You could also call it a T accounts cheat sheet since double-entry accounts are sometimes called T accounts because of how they look on the page: The title of the account is at the top with a line under it, then debits are on the left and credits are on the right, separated by a line down the middle. This method of bookkeeping is also called a ledger account.
Your Accounting Cheat Sheet
Here are some important details that can serve as your debits and credits cheat sheet:
Let’s Say It Another Way
If you’re still a bit confused – and we can understand why you would be since this is confusing stuff – let’s try to say the same thing in a different way while adding in a little about colors. Those who have learned color accounting sometimes color code transactions, and it helps to understand how they do that. Here’s a different sort of accounting cheat sheet that you may find easier to understand:
If you’re still confused, perhaps you’re beginning to understand why the world has bookkeepers with specialized knowledge in double-entry accounting and other ways of keeping track of your business.
For San Diego bookkeeping services to help your business keep accurate records that allow you to always know where you stand financially and how you’re doing, reach out to AD Bookkeeping Services, providers of bookkeeping San Diego businesses can trust for accuracy. For personal service from an honest, experienced professional who doesn’t get confused by things like credits and debits, reach out now to AD Bookkeeping Services for a consultation and quote. You’ll be glad you did.
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