Section 2Applying the Rules of Debit and Credit What You’ll Learn  How to analyze a transaction affecting assets, liabilities, and owner’s equity. What.

Slides:

Advertisements

Similar presentations

Advertisements

Business Transactions and the Accounting Equation Making Accounting Relevant Every business has assets, liabilities (debts), and owner’s equity. Think.

Chapter 6 & 7 Lecture Notes

Transactions That Affect Revenue, Expenses, and Withdrawals What You’ll Learn  The rules of debit and credit for the revenue, expense, and withdrawals.

Property and Financial Claims

 Property  Property Rights  Financial Claims  Credit  Creditor  Assets  Investments  Equity  Owner’s Equity  Liabilities  Business Transaction.

Accounting Bellwork 6 th Hour: Label the following T-Accounts using DR, CR, and NB. –Accounts Receivable –Accounts Payable, Clarks Furniture –Brad Pitt,

Section 2Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions What You’ll Learn  How to analyze transactions that.

Temporary Accounts and Permanent Accounts

Transactions That Affect Assets, Liabilities, & Owner’s Capital Chapter 4 5/15/

Transactions that Effect Assets, Liabilities, and Owner’s Equity Chapter 4.

Accounting Bellwork 3 rd Hour: Turn to p71 in your textbook and answer the two questions in the workplace connection.

0 Glencoe Accounting Unit 2 Chapter 4 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Unit 2 The Basic Accounting Cycle Chapter 3 Business.

Transactions That Affect Revenue, Expenses, and Withdrawals Making Accounting Relevant Businesses earn revenue by selling products or services. Think of.

Transactions That Affect Assets, Liabilities, and Owner’s Equity

Section 1Accounts and the Double-Entry Accounting System What You’ll Learn  How to use T accounts.  Why you need a ledger.  The rules of debit and credit.

Section 2Recording Transactions in the General Journal What You’ll Learn  The purpose of a general journal.  The parts and labeling of a general journal.

Recording Transactions in a General Journal Making Accounting Relevant Some people keep journals to keep track of their daily activities. Making Accounting.

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

Bellringer What is the first transaction in opening up a business? Why do people start a business? What types of activities occur to operate your business?

TRANSACTIONS THAT AFFECT ASSETS, LIABILITIES AND OWNER’S CAPITAL Chapter 4.

Home. Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Financial Claims in Accounting Property and Financial Claims.

Transactions That Affect Assets, Liabilities, and Owner’s Equity Making Accounting Relevant Accounting and finance professionals are key to every business.

Section 2 Transactions That Affect Owner’s Investment, Cash, and Credit What You’ll Learn   How accounts are used in business transactions.   The steps.

Business Transactions & the Accounting Equation

Section 2Applying the Rules of Debit and Credit What You’ll Learn  How to analyze a transaction affecting assets, liabilities, and owner’s equity. What.

Accounting Bellwork 3 rd Hour: Assume that you are a business consultant. A business owner has explained that the business took in revenue of $78,000 last.

Analyzing Transactions into Debit and Credit Parts

Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.Glencoe Accounting Copyright © by The McGraw-Hill Companies, Inc. All rights reserved.

Transactions that affect Assets, Liabilities, and Owner’s Equity

Transactions That Affect Assets, Liabilities and Owner’s Equity Making Accounting Relevant Accounting and finance professionals are key to every business.

Section 2Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions What You’ll Learn  How to analyze transactions that.

Business Accounts An account is a location within an accounting system in which the increases and decreases in a specific asset, liability, or owner’s.

Recording Transactions in a General Journal. Section 1The Accounting Cycle What You’ll Learn  The first three steps in the accounting cycle.  Why is.

Business Transactions and the Accounting Equation Making Accounting Relevant Every business has assets, liabilities (debts), and owner’s equity. Think.

Posting Journal Entries to General Ledger Accounts.

Transactions That Affect Assets, Liabilities, and Owner ’ s Equity Making Accounting Relevant Accounting and finance professionals are key to every business.

Transactions That Affect Assets, Liabilities, and Owner’s Equity Making Accounting Relevant Accounting and finance professionals are key to every business.

Analyzing Transactions into debit and credit parts Chapter 3.

Completing the Accounting Cycle for a Sole Proprietorship Making Accounting Relevant In the workplace, it is important to be able to manage your time efficiently.

Transactions That Affect Assets, Liabilities, and Owner’s Equity

Property and Financial Claims Property is anything of value that is owned or controlled. Financial Claim is the legal right to an item or property. Property.

Chapter 4 Transactions That Affect Assets, Liabilities, and Owner’s Capital.

Chapter 4 Section 1 and Section 2 Transactions that affect assets, liabilities, and owner’s equity.

Transactions That Affect Revenue, Expenses, and Withdrawals Making Accounting Relevant Businesses earn revenue by selling products or services. Think of.

Section 2Applying the Rules of Debit and Credit What You ’ ll Learn  How to analyze a transaction affecting assets, liabilities, and owner’s equity. What.

Business Transactions and the Accounting Equation Making Accounting Relevant Every business has assets, liabilities (debts), and owner’s equity. Think.

That sounds a little confusing.

Property The purpose of accounting is to provide:

Chapter 3 Section 2 Transactions That Affect Owner’s Investment, Cash, and Credit $ $ What You’ll Learn How accounts are used in business transactions.

That sounds a little confusing.

A business’s transactions can be analyzed by using the double-entry accounting system, which recognizes the different sides of business transactions as.

Applying the Rules of Debit and Credit

$ $ $ $ Section 2 Recording Transactions in the General Journal

$ $ $ $ Section 2 Applying the Rules of Debit and Credit

The Steps of the Accounting Cycle. The Accounting Period  Accounting records are summarized for a certain period of time, called an accounting period.

Transactions that Affect Revenue, Expenses, & Withdrawals

Section 1 The income statement

Transactions that affect owner’s Investment, cash & Credit

Transactions That Affect Assets, Liabilities, and Owner’s Equity

Chapter 5 $ Accounting Bellwork

Transactions That Affect Assets, Liabilities, and Owner’s Equity

Section 2 Recording Transactions in the General Journal

$ $ $ $ Section 2 Recording Transactions in the General Journal

That sounds a little confusing.

Point 4 The double-entry system

Chapter 4, Section 2 Applying the Rules of Debit and Credit

Property and Financial Claims

Transactions That Affect Assets, Liabilities and Owner’s Equity

Chapter 4, Section 2 Applying the Rules of Debit and Credit

Presentation transcript:

Section 2Applying the Rules of Debit and Credit What You’ll Learn  How to analyze a transaction affecting assets, liabilities, and owner’s equity. What You’ll Learn  How to analyze a transaction affecting assets, liabilities, and owner’s equity. Why It’s Important You need to analyze transactions properly so that you record them correctly. Why It’s Important You need to analyze transactions properly so that you record them correctly.

Business Transaction Analysis: Steps to Success Business Transaction ANALYSIS Identify1.Identify the accounts affected. Classify2.Classify the accounts affected. + / -3.Determine the amount of increase or decrease for each account affected. Section 2Applying the Rules of Debit and Credit (con’t.)

Business Transaction Analysis: Steps to Success (con’t.) Business Transaction DEBIT-CREDIT RULE 4.Which account is debited? For what amount? 5.Which account is credited? For what amount? Section 2Applying the Rules of Debit and Credit (con’t.)

Business Transaction Analysis: Steps to Success (con’t.) Business Transaction T ACCOUNTS 6.What is the complete entry in T- account forms? Section 2Applying the Rules of Debit and Credit (con’t.) Account Name

Check Your Understanding In double-entry accounting, for each transaction there must be at least two entries. If you are increasing the Cash in Bank account, what other accounts might be affected? Section 2Applying the Rules of Debit and Credit (con’t.)

Business Transaction Analysis Business Transaction 1 ANALYSIS Identify1.The accounts Cash in Bank and Maria Sanchez, Capital are affected. Classify2. Cash in Bank is an asset account. Maria Sanchez, Capital is an owner’s capital account. + / -3. Cash in Bank is increased by $25,000. Maria Sanchez, Capital is increased by $25,000. Section 2Applying the Rules of Debit and Credit (con’t.) On October 1 Maria Sanchez took $25,000 from personal savings and deposited that amount to open a business checking account in the name of Roadrunner Delivery Service.

Business Transaction Analysis (con’t.) Business Transaction 1 (con’t.) DEBIT-CREDIT RULE 4.Increases in asset accounts are recorded as debits. Debit Cash in Bank for $25, Increases in the owner’s capital account are recorded as credits. Credit Maria Sanchez, Capital for $25,000. Section 2Applying the Rules of Debit and Credit (con’t.) On October 1 Maria Sanchez took $25,000 from personal savings and deposited that amount to open a business checking account in the name of Roadrunner Delivery Service.

Business Transaction Analysis (con’t.) Business Transaction 1 (con’t.) T ACCOUNTS 6. Section 2Applying the Rules of Debit and Credit (con’t.) On October 1 Maria Sanchez took $25,000 from personal savings and deposited that amount to open a business checking account in the name of Roadrunner Delivery Service. Maria Sanchez, Cash in Bank Capital Debit + 25,000 Credit + 25,000

Business Transaction Analysis (con’t.) Business Transaction 3 ANALYSIS Identify1.The accounts Computer Equipment and Cash in Bank are affected. Classify2.Computer Equipment and Cash in Bank are asset accounts. + / –3.Computer Equipment is increased by $3,000. Cash in Bank is decreased by $3,000. Section 2Applying the Rules of Debit and Credit (con’t.) On October 4 Roadrunner issued Check 101 for $3,000 to buy a computer system.

Business Transaction Analysis (con’t.) Business Transaction 3 (con’t.) DEBIT-CREDIT RULE 4.Increases in asset accounts are recorded as debits. Debit Computer Equipment for $3, Decreases in asset accounts are recorded as credits. Credit Cash in Bank for $3,000. Section 2Applying the Rules of Debit and Credit (con’t.) On October 4 Roadrunner issued Check 101 for $3,000 to buy a computer system.

Business Transaction Analysis (con’t.) Business Transaction 3 (con’t.) T ACCOUNTS 6. Section 2Applying the Rules of Debit and Credit (con’t.) On October 4 Roadrunner issued Check 101 for $3,000 to buy a computer system. Computer EquipmentCash in Bank Debit + 3,000 Credit – 3,000

Business Transaction Analysis (con’t.) Business Transaction 4 ANALYSIS Identify1.The accounts Delivery Equipment and Accounts Payable—North Shore Auto are affected. Classify2.Delivery Equipment is an asset account. Accounts Payable—North Shore Auto is a liability account. + / –3.Delivery Equipment is increased by $12,000. Accounts Payable— North Shore Auto is increased by $12,000. Section 2Applying the Rules of Debit and Credit (con’t.) On October 9 Roadrunner bought a used truck on account from North Shore Auto for $12,000.

Business Transaction Analysis (con’t.) Business Transaction 4 (con’t.) DEBIT-CREDIT RULE 4.Increases in asset accounts are recorded as debits. Debit Delivery Equipment for $12, Increases in liability accounts are recorded as credits. Credit Accounts Payable—North Shore Auto for $12,000. Section 2Applying the Rules of Debit and Credit (con’t.) On October 9 Roadrunner bought a used truck on account from North Shore Auto for $12,000.

Business Transaction Analysis (con’t.) Business Transaction 4 (con’t.) T ACCOUNTS 6. Section 2Applying the Rules of Debit and Credit (con’t.) On October 9 Roadrunner bought a used truck on account from North Shore Auto for $12,000. DeliveryAccounts Payable— EquipmentNorth Shore Auto Debit + 12,000 Credit + 12,000