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Accounting for Beginners #96 / withDRAW / SHAREHOLDER DISTRIBUTION / DIVIDENDS / THE BALANCE SHEET - YouTube
Channel: CPA Strength
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yo yo yo CPA strength here back with
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another video my best video ever well we
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got we got lightning now I want to say
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say this is one take Timmy babe we just
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going okay we don't even care we're just
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trying to get the information out in a
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timely manner we're trying to help we're
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trying to have fun I love all the
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comments all likes this is based off of
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viewers comments so if you have a
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question about another accounting video
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and you like to see please leave a
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comment down below let's get into this
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this is accounting for beginners number
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96 I have a whole playlist not 96 videos
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right here best accounting playlist in
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the world just check this out
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it's got my DC a blur it's kind of what
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I'm known for it's helped thousands upon
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thousands upon thousands of accounting
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students around the world and ain't
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gonna change let's just say assets equal
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liabilities plus equity that's the basic
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accounting equation and that's always
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gonna happen assets what do you have in
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the business which we have cash from a
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thousand dollars that equals the
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liabilities plus equity liabilities is
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who who you would owe it to and the
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equity is who owns like owner's equity
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who owns who owns the assets does the
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company own the assets or do you owe
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someone but that's not the this isn't
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the let's just say it's assets a
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thousand equals retained earnings of a
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thousand that's under equity and so be
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like it
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this could be like a general a general
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ledger or a general journal so after
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that let's say you withdraw $500 cash
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for personal use the question I got was
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how does this balance in the base
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account
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basic accounting equation and this is
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also the balance sheet the basic
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accounting equation is also the balance
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sheet well let's make a journal entry
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from this withdraw $500 cash what is
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cash cash is an asset let's go to DC a
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blur
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mmm asset in the positive if it's going
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so an asset if it was going up we would
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debit it now I go through DC a blur I go
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all through it in different videos so if
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you're if you're new here please check
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this out this is the key really to mmm
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financial accounting tight you do all
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your journal entries and the journal
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entries is what does everything else so
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but you don't have you don't have an
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asset increasing you have an asset
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decreasing withdraw 500 cash right if
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you have if you have a thousand dollars
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and you're in your hand a thousand
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dollars and you give away five withdraw
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five for your bank account then you're
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gonna have five seven and decrease in
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them out so if you have cash and a
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decreasing amount it is going to be a
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credit it would be increasing debit if
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it was decreasing and be a credit the
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cash so we're gonna write this over here
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we're just gonna put a line here
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Devin credit cash five hundred that's
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gonna be our credit now we know that
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debits have to equal credits we we with
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draw five hundred dollars for personal
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use so that would be a drop a width drop
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for personal use that's what with that's
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what a withdraw is it lessens
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woodie's it's for personal use it's not
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a business expense and you're taking out
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of the money you're taking out you're
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taking out money of a business for your
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own use so it lessens the owner's equity
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it lessens what you have in the business
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does that make sense like I just want
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you know if you're starting out new in
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the accounting you're gonna be going
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really fast like oh like I don't
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understand anything and if you keep
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going like that you're never gonna know
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anything if you just slow down
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that's what work for me I know in the
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beginning the problems will take longer
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but you will know the basics fronting
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back and that's really what you need to
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know in accounting so just just try to
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slow down and think about what's
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happening now give it some big number
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just you know try to make it small like
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a thousand and five hundred is
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manageable in your head but anyway so
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withdraw $500 for cash the personal use
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now that's gonna be a draw $500 so
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there's our debit there's our credit and
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that's our journal entry for this
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transaction right here now let's put
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this in the general ledger the balance
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sheet or whatever this is right here the
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basic accounting equation let's do that
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so you know if cash is a credit of $500
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then you know it is in the is decreasing
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decreasing $500 which would equal cash
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of $500 that's our assets
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$500 cash equals
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and now we have what are we going to
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whatever unit where does this draw of
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500 dollars go withdraw 500 dollars well
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a draw that's why DC a blur is good in
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and that's why I like it in this fashion
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because draw is a cross from equity so
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if you think about it equity owner's
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equity what the owner has in the
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business it's his I'm taking on withdraw
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for personal reasons you're reducing the
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equity and that's exactly where it would
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go it would go under the equity section
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of your assets you would have a draw of
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$500 and that would be a negative
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you'd be reducing it because that's what
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that's what a $500 draw reduces retained
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earnings so you'll be left with five
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hundred dollars of equity of five
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hundred dollars of equity you'd have a
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thousand thousand retained earnings -
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500 draws five hundred dollars of equity
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$500 assets equals zero liability plus
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five hundred equity and you know
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everything I said here might not have
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been perfect and I do try my best
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accounting is just a lot a lot a lot of
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practice a lot of practice and the good
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thing is there's rules and the rules
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don't really change in the basic
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accounting but anyways this is CPA
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strength and I'm out of here for this
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one I'll see you later
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deuces
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