[ljm51981]

I am trying to do my income statement, retained earnings and balance sheet from my adjusted trial balance sheet.

I am confused from my book about the debits and credits. When I transfer them over from the adjusted sheet. Do they stay on the same sides.

For example: assests will be on the debit side. When I do my new income, retained earnings and balance sheets do they remain on the debits side or do I change them to the credit side?

[morgaine300]

First of all, you don't move the sides of the balances of any accounts, ever. If the account has a debit balance, it has a debit balance. It won't change. An entry to it can be on either side, but the balancing side won't ever change. If it does, that means the balance has gone negative and that isn't supposed to happen. In real life all sorts of goofy things can happen and theoretically are supposed to be taken care of in specific ways... but in a book you will not find negative accounts.

As for the financial statements, they aren't debits and credits at all. They are just a reporting of the balances. For instance, take a balance sheet. You just list all your assets. You aren't listing them as debits -- you're just listing the balances. Accumulated depreciation is a contra asset and offsets a fixed asset. On the balance sheet, you won't debit the asset and credit the accumulated depreciation. You will list the asset and subtract the accumulated depreciation to get a net book value. Then all the liabilities are listed together, not as credits. Just listed. Along with equity. The liabilities and equity add together and should equal assets. But they aren't debits & credits.

All pieces of paper with columns aren't debits & credits. They don't actually come with that written on them. They're just blank with columns. If you want to make a journal of it, you write it and you write in dr and cr. If you don't write it, then it's not.

Just as a note, debits & credits are based on the accounting equation. The Balance Sheet basically is reporting the details of the accounting equation. So it's more like debits & credits are based on how the balance sheet looks, not the other way around.

[iscremel]

I agree, amount in the debit side stay on the debit,that means that is an asset, as morgaine300 said base on the accounting equation

[morgaine300]

Thank you for your insight, iscremel. The post is from May so I don't think they're here anymore.