BASIC ACCOUNTING : DR/CR - COMPONENT - EXPENSE A/C

DEBITS AND CREDITS

These are the backbone of any accounting system. Understand how debits and credits work and you'll understand the whole system. Every accounting entryin the general ledger contains both a debit and a credit. Further, all debitsmust equal all credits. If  they don't, the entry is out of balance. That's not good. Out-of-balance entries throw your balance sheet out of balance.Therefore, the accounting system must have a mechanism to ensure that all entries  balance. Indeed, most automated accounting systems won't let you enter an out-of-balance entry-they'll just beep at you until you  fix your error. Depending on what type of account you are dealing with, a debit or credit will either increase or decrease the account balance. (Here comes the hardest part of accounting for most beginners, so pay attention.) Figure 1 illustrates the entries that increase or decrease each type of account.

Debits and Credits vs. Account Types

Account Type  
      
Assets              
Debit Increase
Credit decrease

Liabilities
Debit Decreases
Credit Increases

Income
Debit Decreases
Credit Increases

Expenses
Debit increases
Credit Decreases

Notice that for every increase in one account, there is opposite (and equal) decrease in another.That's what keeps the entry in   balance. Also notice that debits always go on  the left and credits on the right.

COMPONENTS OF THE ACCOUNTING SYSTEM

These are also called sub-ledger 
1. Accounts receivable 
2. Accounts payable 
3. Order entry 
4. Inventory control 
5. Cost accounting 
6. Payroll 
7. Fixed assets accounting

EXPENSE ACCOUNTS

Most companies have a separate account for each type of expense they incur. Your company probably incurs pretty much the same expenses month after month, so once they are established, the expense accounts won't vary much from month to month. 

Typical expense accounts include

v Salaries and wages                  

v Telephone                               

v Electric utilities                       

v Repairs                                   

v Maintenance                           

v Depreciation                           

v Amortization                           

v Interest                                   

v Rent