this presentation on my I know it's sometimes difficult on because my quest to relax and obviously that you might startle vision at times but see if you release it and a during this presentation I swear that is going to pay off big time during past yugoslav marks earned are through transaction also its now assess which is we're hoping around debits and credits are the first thing I wanted to say is that's in a Las presentation I said that every transaction is going to have at least one credits no wind up its so it is incredibly important to you understand how be eased a bit and credits work because debits and credits are going to hear
actually increase and decrease certain accounts and if you don't understand how debits and credits work than you might you might increase or decrease the wrong accounts you might see a you might mix up certain numbers and it could create a bunch of havoc with an of Financial Corporation and you preparing the statements
the next thing I wanted to cover is that business conception with people sir art & Financial Accounting when that is everyday life normally you go to the bank you'll see on your statement where you at an ATM that a dub it usually means a decrease cash in your account at a credit usually means an increase but with them financial accounting contacts this is not what it needs so if I were to say bad I and 17 cashing Dr is just abbreviated for David NCR per credit fun W cash in crediting revenue
this does not mean that I'm decrease in cash an increase in the amount % revenue I have a nose accounts okay so debits and credits this is not what they mean there is actually a specific role with the financial accounting for what debits in credits are which were gonna learn about next few seconds so to actually learn
white debits and credits they were gonna look
Matt the I fundamental accounting equation so let's break bad you yet acid equals liabilities plus shareholders equity sometimes known as just equity or owners equity and with them each of these elements he's are three different elements there are numerous different accounts like cash accounts receivable inventory with an assets liabilities they have a bunch of payables I equity we have common shares retain earnings so there's many different accounts with big each are these elements in all of these elements are going to fluctuate rate
we're not gonna have the same amount of cash we're not gonna have the same honor perceived was all
these accounts are going to change
how are they gonna change wall that's for the debits and credits coming because debits and credits are actually the system out increasing and decreasing the balances of accounts so the first thing I want to actually
break for a biz this this little world which is the rule to financial accounting miss can I kinda clean this up a bit got a lot of stuff going on here and that is debits
debits what David's are going to do is there going to decrease all the lopsided miss hey I just mean I County are I should say HDMI about accounting equation accounts so this picture all these are a ATA so debits are going to increase all the left side on accounting equation account so this is the accounting equation everything on the left side there so this simple lot was actually but I don't think everything on the lot this is the lopsided which is assets and the right side is liabilities and equity so
so if I were to debit amiable website accounts which are like cash and receivables which are all assets I would be increasing the balance in those accounts if I word to debits any a beer rates at accounts like a liability or in equity accounts I would be decreasing the bouncing on account it for credits I'm going to be increasing alt the rates at account so like credit may be appealable I would be increasing the balance
a bad cable account so it's exactly the of the debits increase every all the council outside while credit increased everything on the right side so let's see if we understand not really quickly let me just gerry adams about new this this I'll so if I were to work out a example really quickly let's say that's but say that we have I transaction we purchase purchase a piece o equipments on accounts so the first thing I'm gonna work out is what's going on here so repurchase piece of equipment so this is an asset that were jeanine and we are also heard seen it on account which if ur not pay in cash it would be and accounts payable and accounts payable means re oh so in Miami
according to your definition of a liability knots what a liability is so since we are creating a payable we r actually going to you be I increasing our liabilities because we owe someone money so her ass it is going to be equipments the accounts in our liability count is going to be I accounts here ball so since we're increasing our equipment which is an asset we look at this this were already here which is the rule for debits and credits since we're increase seen I'm acid acid is all last side accounting equation accounts so since we're increasing its we would be deputy mayor equipment so reread debit equipment and since we're increasing reliability which is
I'm accounts payable accounts payable is liability it's on the right side and since we're increasing on our bright side accounts be weighted credits Accounts Payable so you see right there we have one day but we have 1 credit this is a valid transaction and were finished but that one transaction so not exactly how we have um not exactly how we've increased the balance in both the equipment's accounts and the accounts payable accounts so
I know this tutorial has gone a little bit lengthy am going to actually a creed another debits credits tutorial to further continue anything we're talking about with answer hope you got the basics of how debits and credits work we'll talk more about an exit row. See you guys then...
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