yo yo yo CPA strength here back with another video my best video ever well we got we got lightning now I want to say say this is one take Timmy babe we just going okay we don't even care we're just trying to get the information out in a timely manner we're trying to help we're trying to have fun I love all the comments all likes this is based off of viewers comments so if you have a question about another accounting video and you like to see please leave a comment down below let's get into this this is accounting for beginners number 96 I have a whole playlist not 96 videos right here best accounting playlist in the world just check this out it's got my DC a blur it's kind of what I'm known for it's helped thousands upon thousands upon thousands of accounting students around the world and ain't gonna change let's just say assets equal liabilities plus equity that's the basic accounting equation and that's always gonna happen assets what do you have in the business which we have cash from a thousand dollars that equals the liabilities plus equity liabilities is who who you would owe it to and the equity is who owns like owner's equity who owns who owns the assets does the company own the assets or do you owe someone but that's not the this isn't the let's just say it's assets a thousand equals retained earnings of a thousand that's under equity and so be like it this could be like a general a general ledger or a general journal so after that let's say you withdraw $500 cash for personal use the question I got was how does this balance in the base account basic accounting equation and this is also the balance sheet the basic accounting equation is also the balance sheet well let's make a journal entry from this withdraw $500 cash what is cash cash is an asset let's go to DC a blur mmm asset in the positive if it's going so an asset if it was going up we would debit it now I go through DC a blur I go all through it in different videos so if you're if you're new here please check this out this is the key really to mmm financial accounting tight you do all your journal entries and the journal entries is what does everything else so but you don't have you don't have an asset increasing you have an asset decreasing withdraw 500 cash right if you have if you have a thousand dollars and you're in your hand a thousand dollars and you give away five withdraw five for your bank account then you're gonna have five seven and decrease in them out so if you have cash and a decreasing amount it is going to be a credit it would be increasing debit if it was decreasing and be a credit the cash so we're gonna write this over here we're just gonna put a line here Devin credit cash five hundred that's gonna be our credit now we know that debits have to equal credits we we with draw five hundred dollars for personal use so that would be a drop a width drop for personal use that's what with that's what a withdraw is it lessens woodie's it's for personal use it's not a business expense and you're taking out of the money you're taking out you're taking out money of a business for your own use so it lessens the owner's equity it lessens what you have in the business does that make sense like I just want you know if you're starting out new in the accounting you're gonna be going really fast like oh like I don't understand anything and if you keep going like that you're never gonna know anything if you just slow down that's what work for me I know in the beginning the problems will take longer but you will know the basics fronting back and that's really what you need to know in accounting so just just try to slow down and think about what's happening now give it some big number just you know try to make it small like a thousand and five hundred is manageable in your head but anyway so withdraw $500 for cash the personal use now that's gonna be a draw $500 so there's our debit there's our credit and that's our journal entry for this transaction right here now let's put this in the general ledger the balance sheet or whatever this is right here the basic accounting equation let's do that so you know if cash is a credit of $500 then you know it is in the is decreasing decreasing $500 which would equal cash of $500 that's our assets $500 cash equals and now we have what are we going to whatever unit where does this draw of 500 dollars go withdraw 500 dollars well a draw that's why DC a blur is good in and that's why I like it in this fashion because draw is a cross from equity so if you think about it equity owner's equity what the owner has in the business it's his I'm taking on withdraw for personal reasons you're reducing the equity and that's exactly where it would go it would go under the equity section of your assets you would have a draw of $500 and that would be a negative you'd be reducing it because that's what that's what a $500 draw reduces retained earnings so you'll be left with five hundred dollars of equity of five hundred dollars of equity you'd have a thousand thousand retained earnings – 500 draws five hundred dollars of equity $500 assets equals zero liability plus five hundred equity and you know everything I said here might not have been perfect and I do try my best accounting is just a lot a lot a lot of practice a lot of practice and the good thing is there's rules and the rules don't really change in the basic accounting but anyways this is CPA strength and I'm out of here for this one I'll see you later deuces

Contact Us