3 Accounting Toolkit

Excellent! Now that you are familiar with assets, liabilities, and equity, let’s take a look at how the account balances change. This is important because businesses are busy buying and selling, so the value of what they owe and own will change over time.

To change the value in an account, we will use two tools: T-accountsT-Account:
A representation of a financial statement account in the form of a T. The account name appears just above the T. Debits are entered on the left-hand side of the T, and credits are entered on the right-hand side. and journal entriesJournal Entry:
The format required to make changes to financial accounts. A journal entry requires at least one debit and one credit, and debit entries must equal credit entries. This debit and credit information is then posted to the accounts to change the account balances.. These two change-making tools will be used throughout your accounting journey, so it would be wise to invest time and practice now.