Tutorials

Here are a few topics which in my opinion are the building blocks of accounting. Additional accounting information can be found in my blog posts. 


The Basics

Assets = Liabilities + Shareholders' Equity

Examples of Assets: Cash, Accounts Receivable (A/R), Building, Machinery

Examples of Liabilities: Accounts Payable (A/P), Bonds

Shareholders' Equity (SE): Assets - Liabilities.  In essence, it's what is left over after all of the liabilities have been paid off.  It's the 'equity' of the company.


Debits/Credits

Debits increase assets and decrease liabilities and SE.
Credits decrease assets and increase liabilities and SE.

Ex. You have $100 in A/R and $60 in A/P.
If you debit $15 to A/R, your asset increases and you'll have $115 left over.  
If you debit $15 to A/P, your liability decreases and you'll have $45 left over.

Here's some advice: don't try to memorize this - try to visualize and understand.  I find that T-Accounts help a lot.


T-Accounts

Rule of Thumb: Debits go on the right, Credits on the left.  Now this you can memorize!  If you get confused, just think of "Washington DC" (DC --> Debits on the left, Credits on the right).

If you're a beginner, focus on the Assets and the Liabilities at first. One way of understanding whether the debit increases or decreases the account is to think about what a typical balance in the account is.  For example, assets usually have a debit account, thus any debits increase it.  Liabilities, on the other hand, typically have a credit balance and therefore debits decrease it.  

You can also try to visualize the balance sheet.  All accounts on the left of the balance sheet are assets and have debit accounts.  All accounts on the right of the balance sheet have credit accounts.

Okay, that's it for now.  I will try to add more topics to this portion of the site.  Feel free to post any specific subjects  on which you want a tutorial.