Accounting Equation and Double-Entry Basics
Foundational accounting — Assets = Liabilities + Equity, debits/credits, and core statement links.
12 cards· by GuruOwl
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Try it- 01What is the fundamental accounting equation?Assets = Liabilities + Equitybasics
- 02What does a debit do to an asset account?Increases it (assets have debit balances).debits-credits
- 03What does a credit do to a liability account?Increases it (liabilities have credit balances).debits-credits
- 04What does a credit do to revenue?Increases revenue (revenues have credit balances).debits-credits
- 05What does a debit do to an expense?Increases the expense (expenses have debit balances).debits-credits
- 06How does net income affect equity?Net income increases retained earnings (equity); net loss decreases it. Dividends also decrease retained earnings.equity
- 07What is double-entry bookkeeping?Every transaction records equal total debits and credits so the accounting equation stays in balance.basics
- 08What does the balance sheet report?Financial position at a point in time: assets, liabilities, and equity.statements
- 09What does the income statement report?Performance over a period: revenues, expenses, and net income/loss.statements
- 10Record: owner invests $10,000 cash in the business.Debit Cash $10,000; Credit Equity (Common Stock/Owner’s Capital) $10,000.examples
- 11Record: buy $2,000 of supplies on account.Debit Supplies $2,000; Credit Accounts Payable $2,000.examples
- 12What is accrual accounting’s revenue recognition idea?Recognize revenue when earned (performance obligation satisfied), not necessarily when cash is received.accrual