Rules of Debit and Credit
…that would indicate a mistake in your Ledger, which mistake you will have to look for diligently with the industry and intelligence God gave you.
Transactions and events entered in the accounting records are based on the rules of debit and credit. These rules represent the practical application of concepts and principles starting with the accounting equation.
Why this course
The rules of debit take the guesswork out recording accounting entries. An important knowledge base for accounting proficiency is the elements of financial statements, the nature and description of each, and what how transactions affect them. Fortunately, those effects are expressed as increases and decreases, which anybody can figure out. The rules operationalize the theory by stipulating when an account (in an element) should be debited or credited. A couple of rules is easier understood and remembered than trying to recall hundreds or more transactions and how each one is recorded
What you will learn
The course first discusses the nature and description of debit and credit. A discussion of the normal balance explains its importance and how it is determined by the location of the elements of financial statements in the accounting equation. The normal balance is key. It precedes understanding the rules of debit and credit. The rules are applied in double entry accounting, the final integrating link of the concepts from their roots in the accounting equation to the financial statements, maintaining equality of debits and credits throughout the accounting process.