Theory

Key Terms & Definitions

Debit (Dr) — An entry on the left side of an account. Under IFRS, used to increase assets and expenses or decrease liabilities and equity, based on substance over form.

Credit (Cr) — An entry on the right side of an account. Increases liabilities, income, and equity or decreases assets and expenses.

Double-Entry Bookkeeping — Every transaction affects at least two accounts, with total debits always equaling total credits.

Account Classification — Correct grouping of accounts into Assets, Liabilities, Equity, Income, Expenses, including special accounts.

Contra-Account — The side (debit or credit) An account that offsets another account. Example: Accumulated Depreciation (contra-asset with a credit balance).

Accumulated Depreciation — A contra-asset account that records total depreciation to date under IFRS.

Input VAT — VAT paid on purchases, debited as a recoverable tax asset under FTA rules.

Output VAT — VAT charged on sales, credited as a payable to the Federal Tax Authority.

Federal Tax Authority (FTA) — UAE authority overseeing VAT and Corporate Tax compliance.

IFRS Compliance — Ensuring entries reflect accurate timing, classification, and measurement per IFRS and UAE regulations.