Reference materials for the accounting cycle
The chart of accounts is a list of all accounts used by a business, organized by type.
Resources controlled by the business that are expected to provide future benefits. They usually increase with debits and decrease with credits.
Obligations owed to others. They increase with credits because the business receives financing or delays payment.
The owner interest in the business. Equity rises with investments and profit, and falls with drawings and losses.
Revenue increases equity, while expenses reduce equity. These accounts are closed at the end of the period.
First understand what happened in the transaction, then choose the account by type: asset, liability, equity, revenue, or expense. The account number helps you find it quickly in the ledger, while the normal balance shows the side where it usually increases.
