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Hello Folks! (And potential future bookkeepers)
Welcome to another newsletter brought to you from your Bookkeeper Mensch.
Here’s a short newsletter to start your Thursday. This newsletter is designed to accompany the above episode after you listen to ‘The Chart of Accounts, The Sequel Part 1”. Some things work better graphically!
When I talk about double entry accounting, I am speaking about Debits and Credits. This is what accounting is based on. So, each transaction in each category (account) in the Chart of Accounts has at least one Debit and one Credit in it. Computer software ‘hides’ the Debits and Credits through its GUI (graphic user interface), but to be a bookkeeper, you really should know your Debits and Credits.
Below is a chart that I made for myself in late 1995 when I learned this for the first time. I carried it on subways, and busses and studied everywhere. It took six months for it to click in my brain. (But we all learn at different rates, for sure!) Hopefully, it’ll take less time for you!
TO INCREASE VALUE
ASSETS ….. DEBIT
LIABILIES ….. CREDIT
EQUITY….. CREDIT
INCOME …. CREDIT
COST OF GOODS … DEBIT
EXPENSES … DEBIT
If you use the above chart, it’s easier to figure out adjusting entries and how these entries will affect the books.
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