The inventory accounts, as their name suggests, concern the raw materials, work in progress, and finished goods of a company. There are two main classes of accounts, which are derived from the balance sheet as subaccounts and subdivided as required: balance sheet accounts and profit and loss accounts. credits, bonds, outstanding invoices, but also provisions – are summarized under the term debt capital. All liabilities that will have to be paid off in the foreseeable future, or will bear interest – i.e. The shares, reserves and net income for the year form the company’s equity. Liabilities – bank loans, bonds, trade payables, and other liabilities.
Shares, reserves, and net income (or loss) for the year.Current assets – raw materials, consumables and supplies, as well as work in progress and finished goods.Property, plant and equipment – land and buildings, as well as technical equipment and machinery.Intangible assets – licenses, business value, goodwill.The assets on the left are, among other things:
#DEBIT CREDIT AND BALANCE ACCOUNT HOW TO#
There are guidelines for how to break down a balance sheet. However, the left and right sides of the balance sheet are not called debit and credit, but asset and liabilities.
One can say: On the left is what the funds of a company are used for, and on the right is where they come from. It provides an overview of the financial situation of a company: on the left are the assets, on the right: liabilities and equity (which represents the amount of money that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company's debt was paid off). The basis of any double-entry accounting is a single account: the balance sheet.
Only positive amounts are posted – either left (debit) or right (credit). However, the concept of debit and credit also means that there are (in principle) no negative values in double-entry bookkeeping – unlike on the account statement of your bank account, for example. The term “double-entry accounting” derives from the fact that this accounting method affects two separate accounts, as an account has two pages, a debit and credit side. in the event of insolvency) also the business partners, and the state – usually represented by the tax office. These include, for example, the shareholders of the company, under certain circumstances (e.g. The third parties mentioned in the law are all those who might have a legitimate interest in the business transactions of the respective company. This means that accounting records the business transactions of an enterprise in numerical values – and according to the principles of proper accounting, this should take place in a timely and factual manner and the transactions must be traceable, with documentation. These principles consist of legal regulations and informal rules and are intended to ensure that the accounts “provide an expert third party with an overview of the business transactions and the situation of the company within a reasonable period of time.” The business transactions must be accountable on both sides of the transaction. The words debit and credit are taken from accounts, or more precisely, from double entry accounts, as they are used in the principles of proper accounting.