Journal Entries and The Accounting Cycle (Financial Accounting Tutorial #16)

In this financial accounting tutorial I begin our segment on the accounting cycle which starts with recording journal entries within your business. To record a journal entry you must analyze the transaction, decide which accounts are being affected, decide whether the account balances are increasing or decreasing and then journalize the transaction using debits and credits.

Make sure that you always left align your debit entry and that your credit entry is indented, as this is standard accounting protocol for journal entries.

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[bardia]

I wasted my time with Larry Walther's principlesofaccounting videos. You are actually teaching something and Walther seems to just trying to satisfy his Ego or sell his answer keys. Thank you!

[pandamonium]

Hi Dave,
Isn't advertising expense considered a liability (credit) instead of Asset (debit)? Similarly, if I incur administrative charges for registering a company, that is considered an expense? Sorry for my rookie questions.

[sabrinajohnson]

I might have just confused myself here, but in a previous video I thought you said that Expenses would go on the Right Side because they affect Equity. Based on that, in your last example, since you debited A/P for $300 and credited Advertising Expenses for $300, then the Accounting Equation would look like 0=600, which is obviously incorrect. I know that you mentioned briefly that you would put Expenses on the left side since it's increased by Debits, but when I tried it on another example it got more confusing. Like, say a company sold some cabinets for $2, 500 and included the installation cost, which is $800 in that price. would the Journal Entry look like: 

A/R                       2, 500
     Expenses         800
     Sales Revenue             1, 700

So the Accounting Equation would look like 2, 500=800+1700? That makes more sense to me because if expenses were also a Left Side item it would be 2, 500+800=1, 700 which is obviously incorrect. I imagine that I've flubbed something here but I can't seem to work it out in my own head.

I would like to mention that I'm not actually an accounting student. I'm just trying to broaden my knowledge a bit so that I can be more helpful at the small business where I already work as an office assistant. I just figured I'd mention that to explain the tremendous gaps in my knowledge.

Even though I'm not a student, these have been SUPER helpful so far. I already understand how my office works (and in some cases doesn't work) about 1000% better now than I did before. So thanks a bunch for making this!

[Batman-zxlu]

Don't you do Limited Company Accounts??

[staciesmith]

As a college instructor, may I have your permission to integrate your videos into my course?