# ACC 925 Chapter Notes - Chapter 2: Accounting Equation, Financial Statement

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10 Oct 2016
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## Document Summary

Double entry system: a double entry system makes sure two accounts get affected when a transaction occurs to keep the accounting equation in balance. ** rules fo(cid:396) lia(cid:271)ilities a(cid:374)d sha(cid:396)eholde(cid:396)s" e(cid:395)uity a(cid:396)e diffe(cid:396)e(cid:374)t fo(cid:396) de(cid:271)it a(cid:374)d (cid:272)(cid:396)edits. For these accounts the left side (debit) decreases while the right side (credit) increases when a transaction occurs. The chart of accounts: the chart of accounts is used to keep track of all accounts. The t account consists of two slides, the debit and credit. The debit is the left side and displays increases and the credit is the left side which displays decreases. Increases in assets are recorded on the left side (debit) Decreases in assets are recorded on the right side (credit) Increases in liabilities are recorded on the left side (debit) Decreases in liabilities are recorded on the right side (credit) Journal: the journal is a book accountants use to list and record transactions.