--> BTW: the point of an economic transaction is that it is mutually beneficial, a win-win: I want your good/service, and you want my money. So on exchanging the desirable and affordable, for such consideration, we have two beneficiaries. The accounting system thus tracks the money flow side, as an aid to management and stewardship.
Hence we come to the pivotal accounting equation (and income statement or profit and loss account), and it looks like a useful mnemonic is ALOE, Assets = liabilities plus Owner Equity. That is:
[U/d] Jim in Austin, here ff., makes some useful boiled down summaries:
. . . if assets and liabilities are stuff you either own or owe, then income and expense track the movement of stuff in or out of the company. Cash from a sale increases assets and the off-setting double entry is to income. But the sale might also reduce inventory which shrinks assets and that adjustment would be recorded as an expense. The difference in the two adjustments is your gross profit on the sale.
Looking at a balance sheet shows you where a company stands financially at any given moment, the stuff they own and owe. Income and expense reports show movement and trends over time and break out the asset/liability changes into a variety of categories and types . . . .
[D]ebits and credits [--> Left and Right hand of a "Tee" Account] are not pluses or minuses. They are simply two different categories that are associated with account types. Assets and expenses carry a debit balance. That means to increase them you make an entry in the debit column and to decrease them, a credit column entry. Liabilities, equity and income carry a credit balance. Credit column entries increase them and debit column entries decrease their value.
Once events, transactions and value flows are properly categorised and backed up by paper trails (the rule is: everything must be recorded using some credible source document, filed and correctly entered!), the system's underlying General Ledger puts the accounts in proper order.
From these, monthly, quarterly and annual reports are made up based on general principles, and we get the "famous" financial statements used by owners, managers, bankers, and of course the tax man.
PS: Ran across this useful outline in a nutshell.