Читать книгу QuickBooks 2022 All-in-One For Dummies - Nelson Stephen L., Stephen L. Nelson - Страница 40

Roughly 500 years ago, an Italian monk named Luca Pacioli devised a systematic approach to keeping track of the increases and decreases in account balances. He said that increases in asset and expense accounts should be called debits, whereas decreases in asset and expense accounts should be called credits. He also said that increases in liabilities, owner’s equity, and revenue accounts should be called credits, whereas decreases in liabilities, owner’s equity, and revenue accounts should be called debits.

Table 2-3 summarizes the information that I just shared. Unfortunately — and you can’t get around this fact — you need to memorize this table or dog-ear the page so that you can refer to it easily.

TABLE 2-3 You Must Remember This

Account	Debit	Credit
Assets	Increase	Decrease
Expenses	Increase	Decrease
Liabilities	Decrease	Increase
Owner’s equity	Decrease	Increase
Revenue	Decrease	Increase

In Pacioli’s debits-and-credits system, any transaction can be described as a set of balancing debits and credits. This system not only works as financial shorthand, but also provides error checking. To get a better idea of how it works, look at some simple examples.

Take the case of a $1,000 cash sale. By using Pacioli’s system or by using double-entry bookkeeping, you can record this transaction as shown here:

Cash	$1,000	Debit
Sales revenue	$1,000	Credit

See how that works? The $1,000 cash sale appears as both a debit to cash (which means an increase in cash) and a $1,000 credit to sales (which means a $1,000 increase in sales revenue). Debits equal credits, and that’s no accident. The accounting model and Pacioli’s assignment of debits and credits mean that any correctly recorded transaction balances. For a correctly recorded transaction, the transaction’s debits equal the transaction’s credits.

Although you can show transactions as I’ve just shown the $1,000 cash sale, you and I may just as well use the more orthodox nomenclature. By convention, accountants and bookkeepers show transactions, or what accountants and bookkeepers call journal entries, like the one shown in Table 2-4.

TABLE 2-4 Journal Entry 1: Recording the Cash Sale

Account	Debit	Credit
Cash	$1,000
Sales revenue		$1,000

See how that works? Each account that’s affected by a transaction appears on a separate line. Debits appear in the left column. Credits appear in the right column.

You actually already understand how this account business works. You have a checkbook. You use it to keep track of both the balance in your checking account and the transactions that change the checking account balance. The rules of double-entry bookkeeping essentially say that you’re going to use a similar record-keeping system not only for your cash account, but also for every other account you need to prepare your financial statements.

Here are a couple of other examples of how this transaction recording works. In the first part of this discussion of how double-entry bookkeeping works, I describe two other transactions: purchasing $1,000 of inventory for cash and spending $1,000 in cash on advertising. Table 2-5 shows how the purchase of $1,000 of inventory for cash appears. Table 2-6 shows how spending $1,000 of cash on advertising appears.

TABLE 2-5 Journal Entry 2: Recording the Inventory Purchase

Account	Debit	Credit
Inventory	$1,000
Cash		$1,000

TABLE 2-6 Journal Entry 3: Recording the Advertising Expense

Account	Debit	Credit
Advertising	$1,000
Cash		$1,000

By tallying the debits and credits to an account, you can calculate the account balance. Suppose that before Journal Entries 1, 2, and 3, the cash balance equals $2,000. Journal Entry 1 increases cash by $1,000 (the debit). Journal Entries 2 and 3 decrease cash by $1,000 each (the $2,000 credits). If you combine all these entries, you get the new account balance. The following formula shows the calculation:

Beginning balance of cash	$2,000
Plus cash debit from Journal Entry 1	$1,000
Minus cash credit from Journal Entry 2	–$1,000
Minus cash credit from Journal Entry 3	–$1,000
Ending cash balance	$1,000