From the course: Financial Accounting Foundations
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Journal entries
- Journal entries summarize the accounts involved in a transaction, whether those accounts increased or decreased and the associated amounts. Each journal entry has its debit amounts equal to its credit amounts to ensure that the accounting equation is maintained. Now preparation of a journal entry involves a three-step process. Identify which accounts are involved, for each account, determine if it's increased or decreased, and for each account, determine by how much it changed. Now by tradition, in a journal entry, the account being debited is listed first and the account being credited is listed second. Let's now gain some experience with journal entries by recording, in journal entry format, the transactions for Hannah Collister and her business, Hannah Market. Transaction one, invested $700,000 of her own cash in the business. The two accounts involved are cash and paid-in capital. Two, the asset, cash, is…
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