![]() ![]() Revenues decreases with a debit and increases with a credit.Īlso: Please refer to the Helpful Resources tab on the menu. Retained Earnings is made up of two parts: Expenses and Revenues.Įxpenses increases with a debit and decreases with a credit. Retained Earnings decreases with a debit and increases with a credit. Paid-in Capital decreases with a debit and increases with a credit. Owner’s Equity is made up of two parts: Paid-in Capital and Retained Earnings. Liabilities decrease with a debit and increase with a credit. I hope you find the video helpful, and the rap is a great way to remember these important facts!Īssets increase with a debit and decrease with a credit. I know it seems silly, but this actually includes many important aspects in Accounting! Important things to note include “Debits on the left, credits on the right” and “Understand the fundamental accounting equation, an asset increasing is a debit, an asset decreasing is a credit, the reverse is true for liabilities and equity.” These are essential in learning the basics as I introduce you to Accounting. Colin Dodds - Debit Credit Theory (Accounting Rap Song) YeahYeah Yo, yo, you wanna be an accountant Think it over, It aint easy, you might need a four leaf clover. Colin Dodds Release Date ApView All Credits 1 Debit Credit Theory Lyrics Yo You wanna be an Accountant Think it over It ain't easy, you might need a four leaf clover If you ain't. These rules apply to all financial statements.Īs an introduction to this class, please take the time to watch this funny little video about debits and credits! Remember, Owner’s Equity can also be referred to as Stockholder’s Equity. Colin Dodds - Debit Credit Theory (Accounting Rap Song) LESSON CREATED BY Beth Schmidtgall USING TED-Eds LESSON CREATOR Video from Mr. Here you can see the Accounting Equation at work! This is the final product of Assets = Liabilities + Owner’s Equity. ![]() The main equation makes up the Balance Sheet. Now, how does this relate to financial statements? Well, each account also has its own place in financial statements. Since Assets increase with a debit, and liabilities increase with a credit, the equation is balanced! This applies to every business transaction possible, and this is how the statements remain balanced. For example, to record the purchase of equipment using credit an entry would look like:Īs you can see, the equipment account is from the Assets side of the equation, and the accounts payable is from the Liabilities side of the equation. The only difference is we use specific accounts that are a part of the equation. Journal entries are HOW accountants keep everything in balance! When recording business transactions, we are always using this equation. This transfers into anything and everything we will do as accountants. The main thing you need to remember when working is that everything MUST balance! Remember the accounting equation we went over earlier? ![]()
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