Financial Accounts 1

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Running head: FINANCIAL ACCOUNTS 1

Financial Accounts

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FINANCIAL ACCOUNTS 2

Financial Accounts

In accounting, the two accounts increased with debits are the expense and asset accounts.

The accounts are located in different financial statements, such that the expense accounts are

located on the income statement while the asset accounts are located on the balance sheet (Faccia

& Mosco, 2019). In addition, there are three accounts increased with credits in accounting,

namely, equity account, liability account, and revenue account. The equity and liability accounts

are located on the same financial statement, the balance sheet, while the revenue account is

located on the income statement.

Financial transactions can have two increases in the balances recorded, such as when the

owner of a corporation invests $4500. In this case, Cash is debited, and the balance increases by

$4500 since money is deposited into the checking account. On the other hand, the equity account

is credited, increasing its balance by $4500; therefore, the equity and the debit cash accounts

increase their balances (Faccia & Mosco, 2019). Asset (Cash increase) = liability + Owners

Equity (Increase 4500)

Moreover, financial transactions can have two decreases in the balances recorded, such as

when a corporation pays $400 to purchase office supplies. In this case, the office expense

account is debited while the accounts payable is credited. However, Cash is automatically

credited when paying the bill, which debits the accounts payable. The earlier credit is reversed,

and the Accounts payable is debited, which decreases its balance, and Cash is credited, which

reduces its balance (Jensen et al. 2015). Assets (Office equipment) = Cash (Decrease $400) +

Accounts Payable (Decrease $400)

Finally, financial transactions can increase and decrease, such as when a corporation buys

$9000 worth of equipment. In this case, Cash is credited while the asset or equipment account is

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Running head: FINANCIAL ACCOUNTS Financial Accounts Student Name Institution Name 1 FINANCIAL ACCOUNTS 2 Financial Accounts In accounting, the two accounts increased with debits are the expense and asset accounts. The accounts are located in different financial statements, such that the expense accounts are located on the income statement while the asset accounts are located on the balance sheet (Faccia & Mosco, 2019). In addition, there are three accounts increased with credits in accounting, namely, equity account, liability account, and revenue account. The equity and liability accounts are located on the same financial statement, the balance sheet, while the revenue account is located on the income statement. Financial transactions can have two increases in the balances recorded, such as when the owner of a corporation invests $4500. In this case, Cash is debited, and the balance increases by $4500 since money is deposited into the checking account. On the other hand, the equity account is credited, increasing its balance by $4500; therefore, the equity and the debit cash accounts increase their balances (Faccia & Mosco, 2019). Asset (Cash increase) = liability + Owners E ...
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