Guides

Short explanations with worked examples, written for the US convention with notes on how European conventions differ.

• Journal Entries: How to Record a TransactionWhat a journal entry is, how to read a business transaction and the five steps to record it with balanced debits and credits, with four worked examples.
• Debit and Credit Rules by Account TypeWhich accounts increase with a debit and which with a credit, normal balances, and how every entry keeps the accounting equation in balance, with examples.
• T-Accounts: Posting and Balancing the LedgerHow a T-account works, how journal entries are posted to the ledger and how to balance an account at the end of a period, with a worked cash example.
• Trial Balance: What It Proves and How to Find ErrorsHow to prepare a trial balance, what equal totals prove and what they do not, and a step-by-step method to track down the errors that make it unbalanced.
• Adjusting Entries: Accruals, Deferrals, DepreciationWhy adjusting entries are needed at period end and how to record accrued expenses, prepaid expenses, unearned revenue and depreciation, with examples.
• Closing Entries: Revenues, Expenses and DividendsHow closing entries reset revenue, expense and dividend accounts at year end, move net income to Retained Earnings or Capital, and how other charts differ.
• VAT Entries: Input VAT, Output VAT and SettlementHow European businesses record input and output VAT on purchases and sales, settle the balance with the tax office, and how US sales tax differs from VAT.

Glossary