Text 4.The double entry framework. The T account. Debit and Credit

New words:

1. Entry – запись, проводка.

2. Double entry – двойная запись.

3. Framework – рамки.

4. To debit – дебетовать, относить на дебит счета; сущ. расход.

5. To credit – кредитовать; сущ. приход.

6. Investment – помещение капитала.

7. Accounts receivable – счет дебиторов (в балансе), дебиторы по расчетам, дебиторская задолженность.

8. Accounts payable – счет кредиторов (в балансе), кредиторы по расчетам, кредиторская задолженность.

9. Footing – итог, сумма столбца цифр

The T account.

The assets of a business may consist of many items, such as cash, accounts receivable, merchandise, equipment, buildings and land. The liabilities may consist of one or more items, such as accounts payable and notes payable. Similary, owner’s equity may consist of the owner’s investment and various revenue and expense items.

A separate account is used to record the increases and decreases in each type of assets, liability, owner’s equity, revenue and expense.

The T account gets its name from the fact that it resembles the letter T. The T account has three major parts:

1. The Title.

2. The debit or left side.

3. The credit or right side/

The debit side is always on the left and the credit side is always on the right. This is true for all types of asset, Liability, owner’s equity, revenue and expense accounts.

Balancing a T account.

To determine the balance of a T account at any time, simply total the dollar (ruble) amounts on the debit and credit sides. These totals are known as footings. The difference between the footings is called the balance of the account. The amount is then written on the side with the larger footing.

To debit an account means to enter an amount on the left or debit side of the account. To credit an account means to enter an amount on the right or credit side of the account. Debits increase assets and decrease liabilities and owner’s equity. Credits decrease assets and increase liabilities and owner’s equity.

Tasks

1. Complete the sentences:

To debit an account

To credit an account

To determine the balance of a T account

 

A separate account is used to

The T account gets its name

2. Answer the following questions:

a. What is a separate account used to?

b. What major parts has the T account?

c. Debit side is always on the left and credit side is always on the right. For what types of accounts is it true?

d. What do you know about footings?

3. Tell in your own words the defenition of the: debit, credit, the T account, footings, balance.