For those still confused about Assets, Liabilities, Equity, Credits, and Debits, let me see if I can give you a more intuitive primer:
Assets = Money you have.
Liabilities = Money you borrowed from someone else.
Equity = Money you earned.
All the money you have you either (i) borrowed from someone else or (ii) earned. In other words:
Assets (money you have) = Liabilities (money you borrowed) + Equity (money you earned).
When recording a transaction all you have to do is ask yourself two questions:
1. Where did the money come from? (what is the Source)
2. Where did the money go? (what is the Use)
Suppose you borrow $100 from a bank:
1. Where did the money come from? -> you borrowed it from someone else, so increase Liabilities by $100.
2. Where did the money go? -> to your checking account (money you have), so increase Assets by $100.
Adjustments to Source accounts (where money comes from) are Credits, adjustments to Use accounts (where money goes) are Debits, so we could revise the above statement to:
1. Credit Liabilities $100
2. Debit Assets $100
That's basically it. The rest is just breaking things down into sub accounts (e.g. Assets:Checking or Equity:Income).
Instead of "borrowed" you could say "owed" as you state. The basic idea is it represents money you have that you're on the hook for. Could be deferred revenue, accounts payable, bank debt, etc. I say "borrowed" because that's a concrete term that maps to a transaction with which most people are familiar.
I'd also argue that you can work through even the most complicated accounting transaction and build the most complex financial statements by repeatedly asking the questions I've outlined in the above framework. Accounting was meant to be simple and accessible for the layman, but for some reason every Accounting 101 class teaches things like "debit means left and credit means right," which causes most people to throw up their hands and just rely on bookkeepers and accountants for all things money related.
Assets = Money you have. Liabilities = Money you borrowed from someone else. Equity = Money you earned.
All the money you have you either (i) borrowed from someone else or (ii) earned. In other words:
Assets (money you have) = Liabilities (money you borrowed) + Equity (money you earned).
When recording a transaction all you have to do is ask yourself two questions:
1. Where did the money come from? (what is the Source) 2. Where did the money go? (what is the Use)
Suppose you borrow $100 from a bank:
1. Where did the money come from? -> you borrowed it from someone else, so increase Liabilities by $100. 2. Where did the money go? -> to your checking account (money you have), so increase Assets by $100.
Adjustments to Source accounts (where money comes from) are Credits, adjustments to Use accounts (where money goes) are Debits, so we could revise the above statement to:
1. Credit Liabilities $100 2. Debit Assets $100
That's basically it. The rest is just breaking things down into sub accounts (e.g. Assets:Checking or Equity:Income).
Hope that helps.