Accounting Demystified

Chapter 4. Making the Entries

For the beginning student, the hardest aspect of accounting to learn is often whether each account is classified as an asset, a liability, an equity account, revenue, or expense, and when to debit or credit each account. This chapter is designed to provide a reference point in helping to understand how the entries are made. Learning where the accounts are classified is largely a matter of memorization. The Balance Sheet contains the assets, liabilities, and equity accounts (think BALE—Balance sheet: Assets, Liabilities, and Equity). The Income Statement contains the revenues and expenses (think IRE—Income statement: Revenues and Expenses). Every account can be classified as an asset, liability, equity account, revenue, ...