Page 14 - cfi-Accounting-eBook
P. 14
The Corporate Finance Institute Accounting
For asset accounts, which include cash, accounts receivable, inventory,
PP&E, and others, the left side of the T-Account (debit side) is always
an increase to the account. The right side (credit side) is conversely, a
decrease to the asset account. For liabilities and equity accounts, the
debit and credit sides of the T-Account are the same, however, the debit
side signifies a decrease to the account and the credit side signifies an
increase to the account.
T-Accounts for Income Statement Accounts
T-Accounts are also used for income statement accounts, which include
revenues, expenses, gains, and losses.
Once again, debits to revenue/gain decrease the account while credits
increase the account. The contrary is true for expenses and losses.
Putting all the accounts together, we can examine the following:
corporatefinanceinstitute.com 14
