Understanding Debits and Credits

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Course Overview

In this course, participants will learn about the accounting equation and the five categories involved in every business (Assets, Liabilities, Owner’s Equity, Revenue and Expenses). Every financial transaction falls into one or more of these categories. Learn how to create a chart of accounts that meet the needs of your business. Participants will learn how double entry bookkeeping works and the process of recording debits and credits. This course will show participants how to identify, analyze and record transactions using journal entries under the cash basis accounting method.

Course Outcomes

Upon completion of this course, participants will be able to:

• Create a chart of accounts that meet the needs of their business
• Analyze and record transactions accurately and in a timely fashion
• Maintain books using the cash basis accounting method

Course Objectives

• Participants will gain an understanding of the accounting equation and the five accounting categories
• Participants will learn the difference between cash basis accounting and accrual accounting
• Participants will learn the importance of recording financial activity in a timely manner
• Participants will learn how to use the double entry bookkeeping system with a solid understanding of how debits and credits work
• Participants will learn how to properly record financial activity using journal entries

Agenda

Unit one – The Accounting Equation and Categories

• The Accounting Equation
• The Five Accounting Categories
• The Chart of Accounts
• Account Placement
• Activity – Categorizing Accounts
• Cash Basis Accounting vs. Accrual Basis Accounting

Unit two – Debits and Credits

• T-Accounts
• Debits and Credits
• Double Entry Bookkeeping
• Analyze Financial Activities (Transactions)

Unit three – Assets, Liabilities and Owner’s Equity

• Recording Transactions for Assets
• Recording Transactions for Liabilities
• Recording Transactions for Owner’s Equity

Unit four – Revenue and Expenses

• Recording Transactions for Revenue
• Recording Transactions for Expenses
• Activity – Recording Transactions