LESSON 2-2 Analyzing How Transactions Affect Accounts 6/23/2018 LESSON 2-2 Analyzing How Transactions Affect Accounts Original created by M.C. McLaughlin, Thomson/South-Western Modified by Deborah L. Burns, Johnston County Schools, West Johnston High School

Analyzing How Transactions Affect Accounts Before a transaction is recorded in the records of a business, the information is analyzed to determine which accounts are changed and how. Each transaction changes the balances of at least 2 accounts Debits = Credits after each transaction LESSON 2-2

Analyzing How Transactions Affect Accounts Questions for Analyzing a Transaction into its Debit and Credit Parts Which accounts are affected? How is each account classified? How is each classification changed? How is each amount entered in the accounts? LESSON 2-2

RECEIVED CASH FROM OWNER AS AN INVESTMENT LESSON 2-2 6/23/2018 RECEIVED CASH FROM OWNER AS AN INVESTMENT page 32 August 1. Received cash from owner as an investment, $5,000.00. 2 1 4 3 1. Which accounts are affected? Cash & Owner’s Equity 2. How is each account classified? Cash (Asset), Owner’s Equity (Equity) 3. How is each classification changed? Cash increased, O/E increased 4. How is each amount entered in the accounts? Cash (debit), O/E (credit) LESSON 2-2

LESSON 2-2 6/23/2018 PAID CASH FOR SUPPLIES page 33 August 3. Paid cash for supplies, $275.00. 2 1 4 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? LESSON 2-2

PAID CASH FOR INSURANCE LESSON 2-2 6/23/2018 PAID CASH FOR INSURANCE page 34 August 4. Paid cash for insurance, $1,200.00. 2 1 4 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? LESSON 2-2

BOUGHT SUPPLIES ON ACCOUNT LESSON 2-2 6/23/2018 BOUGHT SUPPLIES ON ACCOUNT page 35 August 7. Bought supplies on account from Supply Depot, $500.00. 2 1 4 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? LESSON 2-2

LESSON 2-2 6/23/2018 PAID CASH ON ACCOUNT page 36 August 11. Paid cash on account to Supply Depot, $300.00. 2 1 4 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? LESSON 2-2

chart of accounts – a list of accounts used by a business LESSON 2-2 6/23/2018 TERM REVIEW page 37 chart of accounts – a list of accounts used by a business LESSON 2-2