So continuing through Zeta and the examples how to generalize transactions we go to the transaction number three and here Zeta acquired inventory of credit and off a stationery for cash. To generalize this transaction we record increasing assets and the words increase inventory stationery and that increase is reflected on the debit side. Here you can see those entries and since company Zeta paid for stationary by cash there was decreasing cash and we credit cash account and also since inventory was acquired on credit we have an increase in accounts payable and that increase is reflected on the credit side.
And we include the description of the transaction. This is inventory stationary acquisition so transaction number three was generalized and we can proceed with the next one. The next one is being from petty cash for the prepaid insurance is quite transaction and we have increase in assets prepaid insurance and this account is debited and we have decrease in cash and this account is credited since decrease in cash or decrease in any asset category account is reflected on the credit side and we include description of the transaction and this description is needed in order to be able to track what exact transaction was recorded and what was the substance of their transaction.
And then when we have recorded transaction number four let’s go to the next one here Zeta pays from bank account part of the debt of inventory acquired so what we have in the general journal. We have decrease in assets. It is cash in bank. It becomes lower and the credit bank account and we have decreasing liabilities so this is a vice-versa comparing to the decrease in assets so we indicate decrease in liabilities on the debit side. So we credit bank account as asset category account in order to reflect decrease in assets and we debit liability accounts payable in order to reflect decrease in liabilities and we include description of the transaction here so that was transaction number five.