ZoomBeast & Accounting 1on1 - Part IV

Welcome to the 4th & last installment of ZoomBeast & Accounting 1on1!

Double Entry System:
(AKA, T Accounts)

All accounts have a DEBIT and CREDIT side to them like this Cash account.
They are also known as T accounts to separate the DEBIT from the CREDIT.


Dr = DEBIT
Cr = CREDIT

So why are there two sides?
Simple. Each transaction has a DEBIT & CREDIT side!

Here's an equation to show how it works:

For example, If I sell a product for $100 in cash:



However, not all transactions are done in cash & cheques...
In fact, lots of transactions have the MONEY paid AFTER the goods are received.
The time before payment is made may vary from days to even a few months!

If Athe Leetz company buys a product from ME on CREDIT for $100, they become my DEBTOR. I am their CREDITOR coz they owe me money!

And this is how the transaction will appear:
CREDIT transactions are called INVOICES.
Think of your CREDIT CARDS when handling invoices.
When you make a purchase with ur credit card, the bank sends u a letter.
Its asking YOU to pay up coz the Bank has paid on your behalf and YOU now owe the bank money!


The CASH transactions are called RECEIPTS.
They work like your DEBIT CARDS & ATM cards.
Why? Coz u get a RECEIPT after making the payment.
It is deducted directly from your bank account!


And yes, since 4 is my 4th favourite number, there's no homework! =D
So if you cant figure what's going on here today, go format your brain and start all over from Part I!