Accounting Cycle

May 19th, 2015
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San Jose State University
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An account is an individual accounting record of increases and decreases labeled as debits and credits. There are separate accounts for each type such as assets, liabilities, owner’s equity, revenue and expense account.

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AccountingCycleAccountAn account is an individual accounting record of increases and decreases labeled as debits and credits.There are separate accounts for each type such as assets, liabilities, owners equity, revenue and expense account.Rules on debit and credit1. Assetsincrease bydebitand decrease by credit2. Liabilitiesincrease bycreditand decrease by debit3. Owners Equitiesincrease bycreditand decrease by debit4. Revenueincrease bycreditand decrease by debit5. Expensesincrease bydebitand decrease by creditNormal balanceIt means whatever it takes to increase the account. If it takes a debit to increase the account such as asset and expense, then the account has a normal debit balance. If it takes a credit to increase the account such as liability, owners equity and revenue, then the account has a normal credit balance.Account balanceDifference between total credits and total debits. If total debit exceeds total credits the account has a debit account balance or debit balance. If total credits exceed total debits the account has credit account balance or credit balance.Accounting CycleThe sequence of steps followed in t

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