Back to College

Most universities have either started or will be starting classes very soon. With that in mind, I wanted to share a few pieces of advice with those new accounting majors:

These will ALWAYS be true.

  1. Debits = Credits
  2. Revenue – Expense = Net Income
  3. Assets = Liabilities + Equity

These will be true most of the time.

  1. Revenue is a credit
  2. Expense is a debit
  3. Asset is a debit
  4. Liability is a credit
  5. Equity is a credit

Finally, accounting has a lot of rules, but 90% of the time the answer makes sense (you sell a pen for $10 you get to record $10 in revenue). Focus on the 90% in your first accounting course; don’t worry about the other 10% that doesn’t make sense until you take your intermediate accounting course. Oh, and that other 10% is usually in place because somebody in the past cheated, so we put in a rule to stop them from cheating, but it ended up catching some other stuff we really didn’t mean for it to catch. So, unless you want more rules that don’t make sense, don’t cheat on the rules that do.

Good luck; we look forward to you joining our profession in a few years.

One Comment on “Back to College”

  1. Love this simply commentary on first year accounting!

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