LEDGER T – ACCOUNTS

DEBIT/CREDIT THEORY
ASSETS LIABILITIES B. GOLD, CAPITAL
+ - - + - +
DR CR DR CR DR CR
REVENUE EXPENSES B. GOLD, DRAWINGS
+ + +
CR DR DR
DOUBLE ENTRY SYSTEM OF ACCOUNTING
You may have noticed that for each business transaction:
 at least one account must be debited and at least one account must be credited (at least one debit, at least one credit)
 debits are always listed first and credits are always listed last (debits before credits)
 the total dollar value of the debits must equal the total dollar value of the credits (debits equal credits)
The above is known as the double entry system of accounting because each transaction is recorded in two steps. First it is recorded as a debit (or debits) and then secondly as a credit (or credits) so that the total value of the debit entries equals the total value of the credit entries.
If speaking, we state a typical transaction as follows:
Supplies debit $2000, Bank credit $2000
Bank debit $500, Accounts Receivable credit $500