Journal entries, the entries recording the law firm’s business transactions on its books, are made up of at least one debit and one credit.
A debit is the part of the journal entry that increases an asset or expense account and decreases a liability or equity account. Accounts which increase when debited are found on the left side of the balance sheet and the trial balance, and include Draws, Expenses, Assets, and Losses.
A credit is the part of the journal entry that increases a liability or equity account and decreases an asset or expense account. Accounts which increase when credited are found on the right side of the balance sheet and the trial balance, and include Gains, Income, Revenues, Liabilities, and Owner’s Equity.
Sign up now to get more tips and news from CosmoLex
- The Top New Year’s Resolutions for Law Offices in 2022 (29:14)
- Data Migration Checklist for Law Offices
- What is the difference between Legal Practice Management & Legal Case Management?
- It's Not Too Late to Migrate: Transitioning to New Legal Software in 2022 (25:47)
- 2021 Year-end Accounting Checklist for Law Firms