Double-Entry Accounting, also known as Accrual Accounting. This method of accounting records income and expenses when they are earned or incurred even if the money has not yet changed hands (i.e. deposited or withdrawn from the bank). This method of accounting uses Debits and Credits to record financial transactions. Debits increase Assets and decrease Liabilities/Equity. Credits decrease Assets and increase Liabilities/Equity.

How do Debits and Credits affect the various account types?

When a Homeowner Payment is recorded in HOA Messenger, the Assessment Income account is credited and the Accounts Receivables Account is debited. When the payment is actually deposited into the HOA’s bank account, that Operating Account is debited and Accounts Receivables is credited.

When a payment is made such as an Electric Bill, the Account where the money is being withdrawn from (i.e. Operating Account) is credited, and the appropriate Utilities Expense Account is debited.