Any accountants here able to help?

[lsquare]

I recently went back to school to try out accounting. I already have a BA. This is an accelerated course due to the summer schedule. I have to admit, I'm really struggling. I'm not even sure if I'll pass next week's final exam, which is worth 60%. I barely passed my midterm and everything is now on the line. I have arguably one of the worse instructors ever. He is extremely unapproachable and makes me feel stupid. I've already mentioned that in the course evaluation.

I'm creating this thread because I might ask the random question here and there and I'm hoping someone can help me. Here's one thing that's bothering me a lot and I still haven't mastered it. During the creation of journal entries, how do you know when an account goes to a debit or a credit column? I always lose marks because I put it in the wrong account especially with cash. Is there a general rule to follow here?

 

[BoomerD]

There are a shit-ton of accountants/people with business degrees here.

Here's a good resource for you:

http://www.principlesofaccounting.com/#url


and some for your specific question:

http://www.dwmbeancounter.com/tutorial/DrCrTChart.html

http://www.quickmba.com/accounting/fin/debits-credits/

http://www.wisc-online.com/objects/ViewObject.aspx?ID=acc1004

 

[CPA]

general rule for debits and credits:

1. Assets = Liabilities + Equity, AND
2. Total Debits = Total Credits whether you're talking financial statements or journal entries

knowing that:

1. Assets - debits increase, credits decrease
2. Liabilities - debits decrease, credits increase
3. Equity - debits decrease, credits increase

if you can remember these simple rules, you should be okay.

as for cash, since it's an asset, debits increase your balance, credits decrease it. Do NOT think of cash in accounting terms the same way you do for your checking account. Banks account for customer cash opposite you would in accounting.

 

[Humpy]

I'm also an accounting student. Memorizing the accounting equation chart similar to in BoomerD's 3rd link is what helped me to understand the info in CPA's post. I remember graphical information better.

For journal entries, the way I currently approach them is the debit is "what the company gets" and the credit is "what the company gives in exchange". For ex.:

Company gives cash and gets a forklift. Increase equipment account in the debit column, Decrease cash account with a credit.

Company sells forklift and gets cash. Increase cash account in the debit column, Decrease equipment account with a credit.

I'm a work in progress though, so I'm not sure how this will hold up.

 

[JS80]

There is are huge learning curves in accounting and understanding debits and credits is the first and hardest. Is the textbook not easy to understand? Maybe try Kahn Academy videos?

 

[lsquare]

There is are huge learning curves in accounting and understanding debits and credits is the first and hardest. Is the textbook not easy to understand? Maybe try Kahn Academy videos?

No, I don't find my textbook very useful. The instructor's notes are actually better and that's what I'm ultimately relying on. My final exam is later tonight and I'm worried, but then again, there's probably no point in worrying.

I have a bunch of ratios like ROE and ROA to memorize by this evening. I also have a little trouble with T-Accounts and trying to determine the dividends payable. I know there's a formula and ultimately I'll try to memorize it. It's one thing to have all the information available to me and another to go into an exam with nothing, but my brain.

 

[lsquare]

I'm also an accounting student. Memorizing the accounting equation chart similar to in BoomerD's 3rd link is what helped me to understand the info in CPA's post. I remember graphical information better.

For journal entries, the way I currently approach them is the debit is "what the company gets" and the credit is "what the company gives in exchange". For ex.:

Company gives cash and gets a forklift. Increase equipment account in the debit column, Decrease cash account with a credit.

Company sells forklift and gets cash. Increase cash account in the debit column, Decrease equipment account with a credit.

I'm a work in progress though, so I'm not sure how this will hold up.

That's a good idea of looking at things. Does it work in all scenarios?

 

[lsquare]

general rule for debits and credits:

1. Assets = Liabilities + Equity, AND
2. Total Debits = Total Credits whether you're talking financial statements or journal entries

knowing that:

1. Assets - debits increase, credits decrease
2. Liabilities - debits decrease, credits increase
3. Equity - debits decrease, credits increase

if you can remember these simple rules, you should be okay.

as for cash, since it's an asset, debits increase your balance, credits decrease it. Do NOT think of cash in accounting terms the same way you do for your checking account. Banks account for customer cash opposite you would in accounting.

I know! It's so difficult even though this is the 6th week already and I learned that in the first class.

Another problem that I have with are T-Accounts. I know that asset accounts starts on the debit side and liability accounts start with the credit side. Trying to figure out the final figure can be difficult especially with dividends.

I also find the concepts of determining bonds and the premiums to be difficult as well. I'm still slightly confused in trying to calculate the preferred and common shares value. If you have any tips on how to approach it then that would be great. My exam is at 7PM tonight. I still have a little bit of time to sort this out.

 

[BoomerD]

general rule for debits and credits:

1. Assets = Liabilities + Equity, AND
2. Total Debits = Total Credits whether you're talking financial statements or journal entries

knowing that:

1. Assets - debits increase, credits decrease
2. Liabilities - debits decrease, credits increase
3. Equity - debits decrease, credits increase

if you can remember these simple rules, you should be okay.

as for cash, since it's an asset, debits increase your balance, credits decrease it. Do NOT think of cash in accounting terms the same way you do for your checking account. Banks account for customer cash opposite you would in accounting.

That last bit really fucked me up badly in my first bookkeeping class. "If a debit card takes cash out of my account...why is a debit a plus to cash?"

I had to ask the accounting professor to ass-plain it to me... 😳

I couldn't find it in my old text books, but I had a graphic that explained which accounts were "debit plus" accounts, and which ones were "credit plus" accounts.

Debit +
Assets
Drawing
Expenses

Credit +
Liability
Capital
Revenue

(similar to this one, only more detailed)

http://paceprep.wikispaces.com/Debits+and+Credit

 

[CPA]

I'm also an accounting student. Memorizing the accounting equation chart similar to in BoomerD's 3rd link is what helped me to understand the info in CPA's post. I remember graphical information better.

For journal entries, the way I currently approach them is the debit is "what the company gets" and the credit is "what the company gives in exchange". For ex.:

Company gives cash and gets a forklift. Increase equipment account in the debit column, Decrease cash account with a credit.

Company sells forklift and gets cash. Increase cash account in the debit column, Decrease equipment account with a credit.

I'm a work in progress though, so I'm not sure how this will hold up.

Be careful with that becauseon a P&L it is opposite - a company GETS income and that is a credit and a company GIVES Rent and that is a debit.

 

[CPA]

I know! It's so difficult even though this is the 6th week already and I learned that in the first class.

Another problem that I have with are T-Accounts. I know that asset accounts starts on the debit side and liability accounts start with the credit side. Trying to figure out the final figure can be difficult especially with dividends.

I also find the concepts of determining bonds and the premiums to be difficult as well. I'm still slightly confused in trying to calculate the preferred and common shares value. If you have any tips on how to approach it then that would be great. My exam is at 7PM tonight. I still have a little bit of time to sort this out.

Book value per share of preferred stock = call price + cumulative dividends

Total value of preferred stock = the amount calculated above x total outstanding preferred shares

Book value of common shares = (shareholder equity - total value of preferred stock (above), if any)/total outstanding common shares

Unfortunately, there is no easy way to remember these.