1. 27 June 2013

2.  Analyzing business transactions would involve a dual
effect in any of the elements of the accounting
equation.
 These dual effects would be analyzed and recorded in
terms of debit and credit.

3.  Account – a detailed record of the changes that have
occurred in a particular asset, liability or owner’s
equity during a period of time.
 Consists of three parts:
 The title of the account
 Left or debit side
 Right or credit side

4.  T-Account – a simplified format of account that resembles
the letter T.
 The vertical line in the letter divides the account into its
left and
 right sides. The account title rests on the horizontal line.
DEBIT CREDIT
left side right side
Title of account

5.  Debit
 Indicates left
 Abbreviated as Dr
 Came from the Latin word debere which originally
meant ‘debtor’
 Credit
 Indicates right
 Abbreviated as Cr
 Came from the Latin word credere which originally
meant ‘creditor’

6. ASSETS = LIABILITIES + OWNER’S EQUITY
Left or debit side
ASSETS
Right or credit side
LIABILITIES AND OWNER'S EQUITY
(REVENUE - EXPENSE)
Debit balance Credit balance
Title of account

7.  This pattern of recording debits and credits is based
on the accounting equations:
Rules of Debit and Credit
= +
Debit Credit Debit Credit Debit Credit
for for for for for for
Increase Decrease Decrease Increase Decrease Increase
ASSETS LIABILITIES OWNER'S EQUITY

8.  Franco Diaz invested P100,000 cash to begin his
accounting business.
 The business purchased office supplies on account for
P5,000.
 The business paid one year rental for its office space,
P24,000.
 The business paid ½ of the amount owed in buying
office supplies.