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The Basics of Accounting Cheat Sheet by

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Elements of Financial Statements

Official Account Types
For Beginners
1. Assets
1. Assets
2. Liabil­ities
2. Liabil­ities
3. Capita­l/E­quity
3. Capita­l/E­quity
4. Invest­ments by Owners
4. Revenues
5. Distri­butions to Owners
5. Expenses
6. Revenues
7. Expenses
8. Gains
9. Losses
10. Compre­hensive Income
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The Accounting Equation

Assets
= Liabil­ities + Owner's Equity
Computation for Total Owner's Equity
Beginning Capital
(+) when Owner transfers Money from Personal Bank Account to a Business Account (Company Name, Capital)
Income/ Revenues
(+) will ultimately INCREASE Capital
Expenses
(-) will ultimately DECREASE Capital
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Account Classi­fic­ation Practice

Specific Account Types
Classi­fic­ation
Accounts Payable
Liability
Cash
Asset
Notes Receivable
Asset
Equipment
Asset
Company Name, Capital
Capita­l/E­quity
Supplies Expense
Expense
Building
Asset
Prepaid Rent
Asset
Fees Earned
Income­/Re­venue
Office Equipment
Asset
Miscel­laneous Expense
Expense
Common Stock
Capita­l/E­quity
Service Income
Income­/Re­venue
Unearned Fees
Liability
Supplies
Asset
Accounts Receivable
Asset
Prepaid Expenses
Asset
Mortgage Payable
Liability
Company Name, Drawing
Capita­l/E­quity
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T-Accounts

make Seperate Comput­ations for Each Specific Account Type (ex. Cash, Accounts Receiv­able, Supplies, Rent Expense and etc.) in the form of T-Accounts to Tally the Total of Each Account
the Debit and Credit of Each T-Account must Balance each other out
Debits
money Taken from your account to Cover Expenses
Credits
money Coming Into your account
KEEP IN MIND: The Debit and Credit Entry of Each Specific T-Account depends on their Primary Classi­fic­ation which are as follows
Primary Classi­fic­ation of Accounts
Dr.
Cr.
1. Assets (A)
(+)
(-)
Cash or things like Land, Equipment, or Business Vehicles that could be CONVERTED into Cash
2. Liabil­ities (L)
(-)
(+)
Debts you owe an individual or other businesses (ex. Accounts Payable, Notes Payable, Loans, Unearned Revenue and etc.)
3. Capita­l/E­quity (C)
(-)
(+)
this is the Beginning Capital + Income - Expenses
also Owner's Equity = Assets - Liabil­ities
4. Income­/Re­venues (I)
(-)
(+)
Cash earned through Sales (INCREASES CAPITAL)
5. Expenses (E)
(+)
(-)
what you Spend money on to Operate the Business (DECREASES CAPITAL)
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