Purchase Solution

Accounting Equation/Debits and Credits

Not what you're looking for?

Ask Custom Question

1 - What is the accounting equation? What does it tell you? Why does it have to balance? What happens if the equation does not balance?

2 - What are debits and credits? How do debits and credits affect the accounting equation? Are debits always increases? Are credits always decreases? Why or why not?

Purchase this Solution
Solution Summary

What is the accounting equation? What does it tell you? Why does it have to balance? What happens if the equation does not balance?

Solution Preview

1 - What is the accounting equation? What does it tell you? Why does it have to balance? What happens if the equation does not balance?

The accounting equation is
Liabilities + Equity = Assets.

This tells that the sources of funds are equal to the application of the assets. This balance because of dual aspect concept. This means that every business transaction has a dual aspect as every transaction affects at least two accounts.
If the equation is n't balancing, then it indicates the error in recording. There must be some mistake in entering the transaction into ...

Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

View More Free Quizzes
Related BrainMass Solutions

  • Debits and Credits affect the accounting equation

    176979 Debits and Credits What are debits and credits? How do debits and credits affect the accounting equation? Are debits always increases? Are credits always decreases? Why or why not? Debit and credit are the rules to record the transactions.

  • explain each step of the accounting cycle

    The basics have to do with: * the accounting equation and * the debits and credits of journal entries.

  • True or False questions regarding accounting fundamentals

    (5) Journal entries may contain several debits and one credit, several credits and one debit, or multiple debits and multiple credits.

  • credits and debits

    354934 Help with explaining credits and debits My uncle has ran a motorcycle shop. He has decided to computerize his records and has asked me to explain the basics of accounting to him so that he can enter his data into his accounting software. 1.

  • Accounting Information Systems Questions

    Is it necessary for the accounting information systems to record debits and credits? Why or why not? Why do some organizations continue to use both manual and computerized systems?

  • Financial objectives, accounts, transactions, related issues

    For example, the supplies account contains all debits and credits related to supplies.

  • Steps in the Accounting Cycle

    If credits do not equal debits, the ledgers are reviewed, and the proper corrections are made. The trial balance is then run again, and corrected as necessary, until credits and debits equal. 6.

  • Use of worksheet in preparing financial statements

    The difference is recorded under the head of net income and then the debits and credits balance. 3. Do the debits and credits on the balance sheet columns balance? Why or why not? The debits and credits in balance sheet also do not balance.

  • Explain the recording and posting processes. 2)What is a t

    A trial balance is a printout that includes all of the debits and credits that have been posted to the ledger for the accounting period specified. All of the debits and credits on the trial balance will be equal.

View More Related Solutions