The following little list is geared toward those who are new to double entry accounting, like I was. I found each of the following surprising and counter-intuitive, and learning them was hard work…
- Not everything that takes money out of the checking account is an Expense
–Sometimes you spend money on an Asset, such as an Account Receivable (you loaned money to the other side of your organization) or a Fixed Asset.
- Not every Expense takes money out of the checking account
–Some Expenses increase your Accounts Payable, if you paid for them by taking a loan.
- Increase the balance of an Asset or Expense account by debiting it
–The balances of all the other kinds of accounts are increased by crediting them.