Explanation
Assets, expenses, losses, and the owner's drawing account will normally have debit balances.
Their balances will increase with a debit entry, and will decrease with a credit entry. Liabilities, revenues and sales, gains, and owner equity and stockholders' equity accounts normally have credit balances.
In bookkeeping, a debit can signify an increase in an asset, an expense, and the owner's draws. A debit can also signify a decrease in a liability, revenues, and owner's equity.
The left side of all accounts, whether asset, liability or capital, is called debit and the right side is called as credit.
A credit may signify: An Increase in a liability or owner's equity account or a Decrease in an asset account.
Journal is a book of accounts in which all day to day business transactions are recorded in a chronological order i.e. in the order of their occurence.
Transactions when recorded in a Journal are known as entries.It is the book in which transactions are recorded for the first time.
Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.
Accounts Receivable (AR) is the proceeds or payment which the company will receive from its customers who have purchased its goods & services on credit. Usually the credit period is short ranging from few days to months or in some cases maybe a year.
Journalizing is the process of recording a business transaction in the accounting records. This activity only applies to the double-entry bookkeeping system.
This calls for the identification of the general ledger accounts that will be altered as a result of the transaction.
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