If you can recall, last week I talked about an account often being referred to as a T account. Well, sometimes people also depict T accounts as balancing scales which is not a bad idea when you consider that accounting golden rule number 3 states that total debits must equal total credits.

So if we purchase office furniture, cash will go out of our bank account and hence decrease in value (credit) but our furniture account will increase in value (debit) and hence our books will stay in balance.

Easy Ay?

Other posts in this series:

Accounting golden rule number 1

Accounting golden rule number 2

Reference:

The 80 Minute MBA by Richard Reeves & John Knell

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