Accounting Transactions

What are Accounting Transactions?

Transaction: Any event that affects financial position and is recorded. Transactions affect both sides of the accounting equation.

Transactions are recorded in accounts called “T Accounts”

Balance Sheet Items

1. Assets accounts
   1. Increases recorded on the left side (Debit side)
   2. Decreases recorded on the right side (Credit side)
2. Liability accounts
   1. Increases recorded on the right side (Credit side)
   2. Decreases recorded on the left side (Debit side)
3. Owners’ Equity accounts
   1. Increases recorded on the right side (Credit side)
   2. Decreases recorded on the left side (Debit side)
      

Income Statement Items

1. Expenses
   1. Increases recorded on the left side (Debit side)
   2. Decreases recorded on the right side (Credit side)
2. Income (Revenues)
   1. Increases recorded on the right side (Credit side)
   2. Decreases recorded on the left side (Debit side)

Recording Transactions

1. Transactions are first recorded in Journals
   1. Record Date
   2. Record the account title
   3. Record the posting references
   4. Record the debits and the credits in separate columns
2. After the amounts are journalized, they are then posted to the ledger.
   1. Record date
   2. Any special notations
   3. Journal reference
   4. Record the debits and credits
3. A trial balance can now be taken, which lists all accounts and their up-to-date balance

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