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A more specific definition in common use is an account with a balance that is the opposite of the normal balance (Dr/Cr) for that section of the general ledger. [34] An example is an office coffee fund: Expense "Coffee" (Dr) may be immediately followed by "Coffee – employee contributions" (Cr). [ 35 ]
7.0.0 Intercompany And Related Party Accounts (Dr / Cr) 7.1.0 Intercompany And Related Party Assets (Dr) 7.1.1 Intercompany Balances (Eliminated In Consolidation) (Dr)
The transaction is recorded as a "debit entry" (Dr) in one account, and a "credit entry" (Cr) in a second account. The debit entry will be recorded on the debit side (left-hand side) of a general ledger account, and the credit entry will be recorded on the credit side (right-hand side) of a general ledger account.
The classification of accounts into real, personal and nominal is based on their nature i.e. physical asset, liability, juristic entity or financial transaction. The further classification of accounts is based on the periodicity of their inflows or outflows in the context of the fiscal year: Income is a short term inflow during the fiscal year.
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Asset, expense, and dividend accounts have normal debit balances (i.e., debiting these types of accounts increases them). Liability, revenue, and equity accounts have normal credit balances (i.e., crediting these types of accounts increases them). 0 = Dr Assets Cr Owners' Equity Cr Liabilities.
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