Cheat Sheet - Accounting for Common Business Transactions

While a business conducts a variety of transactions on a daily basis, there are a few transactions that you will come across quite often. This cheat sheet provides a list of such common transactions in a business along with their accounting treatment.

TransactionAccount 1 (Dr.)Account 2 (Cr.)
Receiving advance from the clientAsset – CashLiability – Unearned Revenue 
Raising invoice to the clientAsset – Accounts ReceivableIncome (Increase in Capital) 
Buying assets on cashAsset (Specific category)Asset – Cash 
Receiving a bill (a bill due)Expense (Specific category)Liability – Accounts Payable 
Paying the billLiability – Accounts PayableAsset – Cash (If paid by cash) 
Asset – Checking A/c (If paid by check)
 
Buying office suppliesExpense (Specific category)Asset – Cash (If paid by cash) 
Asset – Checking A/c (If paid by check)
 
Receiving payment from the clientAsset – Cash (If cash received) 
Asset – Checking A/c (If check received)
 
Asset – Accounts Receivable
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