To create a double entry account draw out a big T.
The left hand section is the Debit side.
The right hand section is the Credit side.
The top section is the for title.
What are the different classes of accounts?
All accounts can be organised into six Classes
- Income – Increases profit eg. sales
- Expenses – Decreases profit eg. Rent
- Drawings – Money/goods taken from a business by owner
- Capital – Money put into the business by the owner
- Assets – Money that is owed to a business eg. building
- Liabilities – Money that the business owes eg. Loan
An acronym that I like to use is Dead Clic:
Debit – Expenses,Assets and Drawings when they increase
Credit – Liabilities, Income and Capital when they increase