Debits and Credits Cheat Sheet: A Handy Beginner’s Guide
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What Are Debits and Credits in Accounting?Debits and Credits Accounting FormulaBasic Accounting Debits and Credits ExamplesHow FreshBooks Can HelpWhat’s The Difference Between Debits and Credits?How Accounts Are Affected by Debits and CreditsKey TakeawaysFrequently Asked Questions Liability AccountsImagine that you want to buy an asset, such as a piece of office furniture. So, you take out a bank loan payable to the tune of $1,000 to buy the furniture. With the loan in place, you then debit your cash account by $1,000 to make the purchase. That seems simple enough. You’ve spent $1,00… Equity AccountsLet’s assume that a friend invests $1,000 into your business. Immediately, you can add $1,000 to your cash account thanks to the investment. However, your friend now has a $1,000 equity stake in your business. So, your equity account also increases by $1,000. In this case, the $1,000 pai…
Liability AccountsImagine that you want to buy an asset, such as a piece of office furniture. So, you take out a bank loan payable to the tune of $1,000 to buy the furniture. With the loan in place, you then debit your cash account by $1,000 to make the purchase. That seems simple enough. You’ve spent $1,00…
Equity AccountsLet’s assume that a friend invests $1,000 into your business. Immediately, you can add $1,000 to your cash account thanks to the investment. However, your friend now has a $1,000 equity stake in your business. So, your equity account also increases by $1,000. In this case, the $1,000 pai…
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