accounting notes

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The following accounts
are increased with a Debit:
•
•
•
•
Dividends (Withdraws)
Expenses
Assets
Losses
D - E - A - L when recalling the accounts that
are increased with a debit.
The following accounts
are increased with a Credit:
•
•
•
•
•
Gains
Income
Revenues
Liabilities
Stockholders' (Owner's) Equity
G - I - R - L - S when recalling the accounts that
are increased with a credit.
Categories of Adjusting Entries
Most adjusting entries fall into one of four general categories:
1. Converting assets to expenses (Deferred Expenses).
Results from cash being paid prior to an expense being incurred.
2. Converting liabilities to revenue (Deferred Revenue).
Results from cash being received prior to revenue being earned.
3. Accruing unpaid expenses (Accrued Expenses).
Results from expenses being incurred before cash is paid.
4. Accruing uncollected revenue (Accrued Revenue).
Results from revenue being earned before cash is received
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