4.3 – Account Balances & Terminology Chapter 4
What is the Balance in the Cash T-Account (Ledger)? 2
1. ___________________of the account ______ writing the balance of each side beneath the last item on each side. 2. _____________the _______________________ total and record it ____________________. 3. __________the __________ amount. Calculating the Balance of an Account
Calculate all the Balances of the T-Accounts 4
This is the balance in each of the ledger accounts and the side it is written on represents if it is a _______ balance or a ________balance. Usually: Assets have a _________Balance Liabilities have a _______Balance Owner’s Equity has a ________Balance __________= _____________ What do these balances represent?
Sometimes an asset account might have a credit balance or a liability will have a debit balance. For instance: If the business takes out more cash than is in their bank account because they have an overdraft agreement, then the cash would have a credit balance. Your business overpays an accounts payable balance then it will end up with a debit balance. These balances don’t usually have an exceptional balance for long. Exceptional Account Balances
__________________– when a business buys from another business, they are usually given terms that allow them to pay for the goods at a later date. Here is some terminology: 1. ________________– items are received from a supplier but not paid for. ___________________________________ 2. _____________– items are sold but the customer will pay later. _______________________________ Interpreting Transactions
3. _____________– you have paid money to a creditor (Accounts Payable) ______________________________ 4. _________________– a customer has paid a debt that they owe you. _______________________________ Interpreting Transactions
How it looks in a T-account
A. Received $180 from M. Coburn on account. B. Paid $100 to Tri Tech Computers on account. C. Performed a $200 service for G. Vanderveen on account. D. Purchased $300 of office furniture from Office Outfitters on account. Your Turn – What is the transaction for each situation.