| A | B |
|---|
| When you buy an asset with cash, | you debit the asset account and credit cash (also an asset account). |
| Buying an asset on account | means that you bought the asset using credit (liabilities) |
| Assets are items in which the company | owns equity. |
| Items that the company owns are | assets. |
| What companies owe are | liabilities. |
| Owner's Equity is what the owner | has invested in the company. |
| When you add an amount on one side of the accounting equation | you must add something to the other side of the accounting equation. |
| When you subtract an amount on one side of the accounting equation | you must subtract the same amount on the other side of the accounting equation. |
| On the asset side of the accounting equation, | it is common to add one asset and subtract another asset (usually this is when an asset is purchased for cash). |
| According to the Accounting Equation, Assets must = | Liabilities + Owner's Equity. |
| The accounting equation requires that | both sides of the equation to balance. |
| If the owner contributes an asset to the company, | both assets and owner's equity are increased. |
| When the owner withdrawals assets from the company, | assets are decreased and owners equity is decreased. |
| For each transaction, ask yourself | whether you are adding or subtracting an asset |
| For each transaction | determine if you are adding or subracting cash. |
