College
Accounting
Heintz & Parry20th Edition
The Double-Entry
Framework
3Chapter
1
Define the parts of a T
account.
Debit Credit
SHAPED
LIKE a “T”
Debit Credit
Debit means
Left
Credit means
Right
Dr. Cr.Abbreviation
for Debit
Abbreviation
for Credit
Dr. Cr.
CASH
Account Name
• Every T account has an increase side and a
decrease side
• Some accounts increase on the debit side and
some accounts increase on the credit side
2
Foot and balance
a T account.
STEP #2: Find the balance by
finding the difference between the
debit and credit totals.
$3,500 debit footing
– 3,130 credit footing
$ 370 balance
CASH
2,000500570430
3,500
FOOTING
1,200300200
5080
200300650150
3,130
FOOTING
STEP #1 FOOT
THE DEBIT AND
CREDIT SIDES
To “Foot” means
to Total
CASH
2,000500570430
3,500
1,200300200
5080
200300650150
3,130370
BALANCE
The balance
is written on
the side with
the larger
total.
3
Describe the effects of
debits and credits on
specific types of
accounts.
ASSET ACCOUNTS
Dr. Cr.
+
Increase on
the debit side
Decrease on
the credit side
–
In every transaction, debits must
equal credits.
LIABILITY ACCOUNTS
Dr. Cr.
+
Decrease on
the debit side
Increase on
the credit side
–
CAPITAL ACCOUNT
Dr. Cr.
+
Decrease on
the debit side
Increase on
the credit side
JUST LIKE LIABILITY
ACCOUNTS
–
DRAWING ACCOUNT
Dr. Cr.
+
Increase on the
debit side
Decrease on the
credit side
JUST LIKE
ASSET ACCOUNTS
–
REVENUE ACCOUNTS
Dr. Cr.Decrease on
the debit side
Increase on
the credit side
JUST LIKE LIABILITY AND
CAPITAL ACCOUNTS
+–
EXPENSE ACCOUNTS
Dr. Cr.Increase on the
debit side
Decrease on the
credit side
JUST LIKE ASSET
ACCOUNTS
+ –
4
Use T accounts to
analyze transactions.
Purchased office supplies for $800 cash.
Identify the accounts that are
affected.
CASHOFFICE
SUPPLIES
Classify these accounts as assets,
liabilities, owner’s equity, revenues, or
expenses.
CASHOFFICE
SUPPLIES
Identify the location of the accounts
in the accounting equation and/or
the owner’s equity umbrella—left or
right.
CASH
DR. CR.
+
OFFICE SUPPLIES
DR. CR.
+– –
Did Office Supplies
increase or decrease in
this transaction?
INCREASED
OFFICE SUPPLIES
DR. CR.
800+ –
Did Cash increase or
decrease in this
transaction?
DECREASED
CASH
DR. CR.
800+ –
DR.
CASH
+800
CR.
OFFICE SUPPLIESDR. CR.
800+– –
Purchased equipment on
account for $3,000.
Identify the accounts that are
affected.
EQUIPMENTACCOUNTS
PAYABLE
Classify these accounts as assets,
liabilities, owner’s equity, revenues, or
expenses.
EQUIPMENT
ACCOUNTS
PAYABLE
Identify the location of the accounts
in the accounting equation and/or
the owner’s equity umbrella—left or
right.
EQUIPMENT
DR. CR.
+
ACCOUNTS PAYABLE
DR. CR.
+– –
Did Equipment increase
or decrease in this
transaction?
INCREASED
EQUIPMENT
DR. CR.
3,000+ –
Did Accounts Payable
increase or decrease in
this transaction?
INCREASED
ACCOUNTS PAYABLE
DR. CR.
3,000
+–
DR.
ACCOUNTS PAYABLE
+3,000
CR.
EQUIPMENTDR. CR.
3,000+– –
Mary Adams, the
owner, invested
$25,000 in the
business.
Identify the accounts that are affected and
classify these accounts as assets, liabilities,
owner’s equity, revenues, or expenses.
M. ADAMS, CAPITAL CASH
DR. CR. DR. CR.
OWNER’S EQUITY ASSET
Identify the location of the accounts
in the accounting equation and/or
the owner’s equity umbrella—left or
right.
CASH
DR. CR.
+
M. ADAMS, CAPITAL
DR. CR.
+– –
CASH
DR. CR.
+
M. ADAMS, CAPITAL
DR. CR.
+
INCREASED INCREASED
25,000 25,000
– –
DR.
M. ADAMS, CAPITAL
+25,000
CR.
CASHDR. CR.
+25,000
– –
Mary withdrew
$1,500 for
personal
expenses.
Identify the accounts that are affected and
classify these accounts as assets, liabilities,
owner’s equity, revenues, or expenses.
M. ADAMS, DRAWING CASH
DR. CR. DR. CR.
OWNER’S EQUITY ASSET
Identify the location of the accounts in
the accounting equation and/or the
owner’s equity umbrella—left or right.
CASH
DR. CR.
+
M. ADAMS, DRAWING
DR. CR.
+– –
CASH
DR. CR.
+
M. ADAMS, DRAWING
DR. CR.
INCREASED DECREASED
1,500 1,500+– –
DR.
M. ADAMS, DRAWING
1,500
CR.
CASHDR. CR.
1,500+ +– –
Mary performed services and
received $4,500 in cash.
Identify the accounts that are affected and
classify these accounts as assets, liabilities,
owner’s equity, revenues, or expenses.
CONSULTING FEES CASH
DR. CR. DR. CR.
REVENUE ASSET
Identify the location of the accounts
in the accounting equation and/or
the owner’s equity umbrella—left or
right.
CASH
DR. CR.
CONSULTING FEES
DR. CR.
+ +– –
CASH
DR. CR.
CONSULTING FEES
DR. CR.
INCREASED INCREASED
4,500 4,500
+ +– –
DR.
CONSULTING FEES
4,500
CR.
CASHDR. CR.
4,500+ +– –
Mary performed
$6,000 of services
on account.
DR.
CONSULTING FEES
6,000
CR.
ACCOUNTS
RECEIVABLEDR. CR.
6,000
ACCOUNTS
RECEIVABLE
INSTEAD OF CASH
+ +– –
Mary Adams paid her assistant
$750 in wages.
Identify the accounts that are affected and
classify these accounts as assets, liabilities,
owner’s equity, revenues, or expenses.
WAGES EXPENSE CASH
DR. CR. DR. CR.
EXPENSE ASSET
Identify the location of the accounts in
the accounting equation and/or the
owner’s equity umbrella—left or right.
CASH
DR. CR.
WAGES EXPENSE
DR. CR.
+ +– –
CASH
DR. CR.
WAGES EXPENSE
DR. CR.
INCREASED DECREASED
750 750+ +– –
DR.
CASH
750
CR.
WAGES EXPENSE
DR. CR.
750+ +– –
5
Prepare a trial balance
and explain and
explain its purposes
and linkages with the
financial statements.
• A listing of all accounts and their balances
• A totaling of debits and credits
• Is proof that debits equal credits and that the
accounting equation has remained in balance
• Used as an aid in preparing financial statements
Account Title Debit Balance Credit Balance
HEADING should include:
•Name of the company
•Title of the document—“Trial Balance”
•Date of the trial balance
Account Title Debit Balance Credit Balance
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Delivery Equipment
370 00
650 00
200 00
3,600 00
80 00
All asset accounts are
listed first
Account Title Debit Balance Credit Balance
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Delivery Equipment
Accounts Payable
370 00
650 00
200 00
3,600 00
1,800 00
Liabilities are
shown next
Account Title Debit Balance Credit Balance
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Delivery Equipment
Accounts Payable
Jessica Jane, Capital
Jessica Jane, Drawing
370 00
650 00
200 00
3,600 00
1,800 00
2,000 00
80 00
150 00
Now the owner’s equity
accounts
Account Title Debit Balance Credit Balance
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Delivery Equipment
Accounts Payable
Jessica Jane, Capital
Jessica Jane, Drawing
Delivery Fees
370 00
650 00
200 00
3,600 00
1,800 00
2,000 00
80 00
150 00
2,150 00
Account Title Debit Balance Credit Balance
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Delivery Equipment
Accounts Payable
Jessica Jane, Capital
Jessica Jane, Drawing
Delivery Fees
Rent Expense
Telephone Expense
Wages Expense
370 00
650 00
200 00
3,600 00
1,800 00
2,000 00
80 00
150 00
2,150 00
200 00
50 00
650 00
Account Title Debit Balance Credit Balance
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Delivery Equipment
Accounts Payable
Jessica Jane, Capital
Jessica Jane, Drawing
Delivery Fees
Rent Expense
Telephone Expense
Wages Expense
370 00
650 00
200 00
3,600 00
1,800 00
2,000 00
80 00
150 00
2,150 00
200 00
50 00
650 00
5,950 00 5,950 00
It balances!!!
Debits = Credits