This question has been deleted and is no more available to answer.
The Balance Sheet Transaction Example and Example of an Income Statement Transaction.

Share using link:

Direct share:

Jul 7 '19 at 13:59:27

1 Answer

If a company receives payment from a client for a $200 invoice, for example, the company accountant increases the cash account with a $200 debit and completes the entry with a credit, or reduction, of $200 to accounts receivable. The posted debit and credit amounts are equal.

In this instance, one asset account (cash) is increased by $200, while another asset account (accounts receivable) is reduced by $200. The net result is that both the increase and the decrease only affect one side of the accounting equation. Thus, the equation remains in balance.

The income statement follows its own formula, which can be written as follows:

{Revenue} -{Expenses} = {Net Income (NI) or Net Profit}Revenue−Expenses=Net Income (NI) or Net Profit

It is possible for an accounting transaction to impact both the balance sheet and the income statement simultaneously.

For example, assume that a company bills its client for $500. The accountant would enter this transaction into the accounting ledger by posting a $500 debit (increase) to accounts receivable (a balance sheet asset account) and a $500 credit (increase) to revenue, which is an income statement account. Debits and credits both increase by $500, and the totals stay in balance.
Jul 7 '19 at 14:6:0
6 months ago
150 times