Commit a43fd75b authored by michael lundquist's avatar michael lundquist
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Done up to T-accounts. After them, I need to do closing entries and I'm done...

Done up to T-accounts. After them, I need to do closing entries and I'm done with ch4, can do HW and quizzes and EC! Gtg to class.
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...@@ -117,13 +117,36 @@ Assets = Liabilities + (Contributed Capital + Retained Earnings) ...@@ -117,13 +117,36 @@ Assets = Liabilities + (Contributed Capital + Retained Earnings)
## The Journal Entry ## The Journal Entry
- __Journal entries__: A short-hand way to represent which accounts are affected by a transaction and how they are affected. - __Journal entries__: A short-hand way to represent which accounts are affected by a transaction and how they are affected.
- __debit__: cash inflows - __debit__: increases to the left side of the accounting equation, or decreases to the right side. (↑← || ↓→)
- on the left side of a journal entry - on the left side of a journal entry
- __credit__: cash outflows - __credit__: increases to the right side of the accounting equation, or decreases to the left side. (↓← || ↑→)
- on the right side of a journal entry - on the right side of a journal entry
- __Compound journal entries__ involve more than 2 accountss - __Compound journal entries__ involve more than 2 accounts
### The Double Entry System ### The Double Entry System
- The __double entry system__ maintains the equality of the accounting equation by ensuring `journal entry debits == journal entry credits.`
- conceptually, the double entry system means a transaction is an exchange from one account to another
### The Journal Entry Box
- They have a memory thing here. Just remember:
- (↑← || ↓→)?debit:credit;
- components of a transaction:
- the accounts affected
- the amount of the affect
- if it's positive or negative
### Journal Entries and the Accounting Equation: Examples
- figure 4-8 has some examples.
- just remember, the accounting equation is always maintained.
### T-Accounts
- __T-accounts__ are like journal entries but for only 1 account.
- these obviously don't have to balance; but like journal entries debits go on the left, credits on the right.
- -
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