Verified Document

Rules Of Debit And Credit Essay

Related Topics:

Rules of Debit and Credit Financial transactions under double entry system have double effect because they involve at least two accounts. One is credited and the other is debited. The debiting and crediting has to be done on basis of laid down rules.

Accounts are often classified in terms of assets, liabilities, income, and expenses (Larson & Jensen, 2005). Expenses are further classified thus: capital expenses and revenue expenses. Assets are classified in terms of their liquidity. They are properties and possessions that an organization has that can be liquidated within a year or after a year. The properties and possessions can have physical existence or no physical existence. They can be tangible or intangible. Liabilities are a business enterprise debts and obligations. A business enterprise therefore has an obligation to pay its debts on a future date. Assets are created when a venture invests its capital. Income...

It is the returns received from the resources invested in a business. Expenses are the costs an enterprise incurs in its endeavors to earn revenue. Basically, profit is the excess of income over expenses in a specific period. Loss on the other hand, is the excess of expenses over income (Larson & Jensen, 2005). Capital expenditures have a life of more than one year. They create an asset used in generating future income. A typical example of capital expenditure is a machinery or furniture purchased. Revenue expenditures are day-to-day expenses with instantaneous benefits like employee salary or rent paid on a leased building. Any account: be it an asset, a liability, income, or an expense that provides some sort of benefit to a business venture is debit (Larson & Jensen, 2005). However, any undertaking that compels a business enterprise to return benefit…

Sources used in this document:
References List

Larson, K. & Jensen, T. (2005). Fundamental Accounting Principles. McGraw-Hill Ryerson

Pieters, A. & Dempsey, H.N. (2009). Introduction to financial accounting (7th ed.). Durban:

LexisNexis.
Cite this Document:
Copy Bibliography Citation

Related Documents

Accounting Control
Words: 2300 Length: 8 Document Type: Case Study

Advice for the Company on the New Internal Control Requirements Internal control requirements are the policies, mechanisms and procedures that organizations should satisfy to minimize the operational risks. The internal control is very critical to deter employees from implementing fraudulent operations; an organization is required to adhere to the internal system before going public. Section 404 of the SOX (Sarbanes-Oxley) Act states that internal control is critical for a publicly

Banking in the 1899 Case of Austen
Words: 3517 Length: 10 Document Type: Essay

Banking In the 1899 case of Austen v United States Bank 174, the Supreme Court defined a bank in the following words: "A bank is an institution, usually incorporated with power to issue its promissory notes intended to circulate as money (known as bank notes); or to receive the money of others on general deposit, to form a joint fund that shall be used by the institution, for its own benefit,

Deluxe Corporation Is a Leader in the
Words: 2030 Length: 7 Document Type: Essay

Deluxe Corporation is a leader in the check printing industry. However, recent times have struck Deluxe with financial structure problems associated with obtaining the most optimal capital structure. Therefore, the objective of this summary is to assess the recommended capital structure alternative and its impact on the current capital structure. The current problems with the capital structure are the equity-based financing to which the company will not have the free-cash

Cyber Crime and Technology Crime
Words: 4865 Length: 14 Document Type: Research Paper

Cyber Crimes The available and accessible features of 21st century make it hard for any individual to think about a life without technology. In real, the world has crossed several stages and eras devoid of the cyber world. Despite this truth, imagining life without technology is a difficult task today. This is because communication between countries of the two opposite poles has now become easy; it's merely like being in touch

Kuali Test Drives the Kuali Financial Systems
Words: 1281 Length: 4 Document Type: Essay

Kuali Test Drives The Kuali Financial Systems (KFS) are a select grouping of software applications that are financially-based to meet the needs of all Carnegie Class Institutions (colleges, universities, and organizations that share a vision for open source-based software solutions.) It is based on Indiana University's Financial Information Systems and is unique because, like some open source software, it is a collaborative effort and approach to financial needs, design, and reporting

Sarah's Legal Adviser Under the Previously Described
Words: 1904 Length: 6 Document Type: Essay

Sarah's legal adviser under the previously described scenario, there a several questions I would like to ask my client before devising any potential defenses against Barry's charge of breach of contract. According to the facts presented by both parties, on Wednesday a conversation took place to negotiate the terms of a potential sale, with ownership of a refurbished laptop being transferred to Barry in exchange for $1,000 payment. On

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now