College Accounting (Book Only): A Career Approach
College Accounting (Book Only): A Career Approach
13th Edition
ISBN: 9781337280570
Author: Scott, Cathy J.
Publisher: South-Western College Pub
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Chapter 2, Problem 2A

A fellow accounting student has difficulty understanding how the fundamental accounting equation stays in balance when a compound entry with one debit and two credits is recorded. Consider, for example, that a business bought equipment for $15,000, paid $5,000 in cash, and placed the remainder on account.

This means that there are two credits and one debit—one debit and one credit on the left side of the equation and the other credit on the right side of the equation. Explain to your fellow student how the equation stays in balance.

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Students have asked these similar questions
“Since you are enrolled in an introductory accounting class, a friend asks you the following: "I have never understood debits and credits." Provide a brief explanation of the terms debit and credit and how they are used in an accounting information system.
What are some tips for knowing when accounts are debited and when they are credited? I know that assets are increased with debits and decreased with credits (and liabilities are the opposite). However, I am having some trouble trying to figure out when accounts need to be debited and credited in the accounting problems.
Would you please remind me how the debits and credits system works? Why do the assets get debit increased and the liabilities and owner’s equity get debit decreased? I know the parts must balance and clear each other out, but reviewing my notes from a previous class, I’m having a hard time getting a perspective on the principle of the T-balance.

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College Accounting (Book Only): A Career Approach

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