Visual Chart of Accounts
This chart illustrates which accounts typically have debit and credit balances.
The Balance Sheet:
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Debits |
Credits |
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Assets: |
Liabilities: |
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Current Assets: |
Current Liabilities: |
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Cash |
Accounts Payable |
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Accounts Receivable |
Short Term Loans |
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Inventory |
Accrued Expenses & Taxes |
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Prepaid Expenses |
Current Portion of Long Term Debt |
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Long Term Debt |
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Fixed Assets: |
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Land |
Equity: |
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Building |
Common Stock |
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Fixtures & Equipment |
Paid in Capital |
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Retained Earnings |
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Deposits |
Year-to-Date Earnings |
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Total Assets |
Total Liabilities and Equity |
The Balance Sheet got its name from the fact that it balances. The Debits (the positive numbers) are equal to the Credits (the negative numbers.) They balance.
The Income Statement has other names such as the Profit & Loss or the P&L. When income is greater than expenses, there is a profit. If expenses exceed income there is a loss. The amount of the Profit or Loss has to be included on the Balance Sheet to make it balance. This number goes on the line called Year-to-Date Earnings.
The Profit & Loss (also known as the P&L or the Income Statement)
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Debits |
Credits |
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Expenses: |
Income (Sales & Revenue): |
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Cost of Goods Sold |
Sales of Merchandise |
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Advertising & Marketing |
Sales of Services |
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Bank Charges |
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Depreciation |
Other Income: |
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Interest |
Rental Income |
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Legal & Accounting |
Interest Income |
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Payroll |
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Rent |
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Utilities |
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Other Expenses: |
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Taxes |
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