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

Accounts and the Double-Entry Accounting System Chart of Accounts – A list of all accounts used by a business. Account – record of changes and balances of a specific asses, liability or component of owner’s equity. Ledger – Sometimes called the “General Ledger” it is a group of accounts Double-Entry Accounting- Tracks every transaction as a debit or credit to organize and keep the accounting equation in balance. Pgs 78-79

Roadrunner Delivery Service 1550 Gateway Blvd. Sacramento, CA 94230 Chart of Accounts Assets 101 Cash in Bank 105 Accounts Receivable – City News 110 Accounts Receivable – Green Company 115 Computer Equipment 120 Office Equipment 125 Delivery Equipment Liabilities 201 Accounts Payable – Beacon Advertising 205 Accounts Payable – North Shore Auto Owner’s Equity 301 Maria Sanchez – Capital 302 Maria Sanchez – Withdrawals Revenue 401 Delivery Revenue Expenses 501 Advertising Expense 505 Maintenance Expense 510 Rent Expense 515 Utilities Expense Pg 79

T Accounts T-Accounts divide each account into a Debit and Credit side. The left side is always the DEBIT side The right side is always the CREDIT side Every account has a Normal Balance side meaning either a natural debit or credit balance. The Debit side and Credit side distinguish whether an account balance is increasing or decreasing. Accounts always increase on their Normal Balance side and decrease on the opposite side. Assets’ Normal Balance side is always Debit Liabilities and Owner’s Equity Accounts’ Normal Balance side is always Credit. Pgs 79-80

T Accounts Asset Accounts = Liabilities + Owner’s Equity Debit + Increase Normal Balance Credit - Decrease Debit - Decrease Credit + Increase Normal Balance Debit - Decrease Credit + Increase Normal Balance Do Problem 4-1 Together. Pg 85 WP 34 Pgs 80-82

Pgs 84-87 T Accounts