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LESSON 2-2 Analyzing How Transactions Affect Accounts

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1 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

2 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

3 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

4 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, 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

5 LESSON 2-2 6/23/2018 PAID CASH FOR SUPPLIES page 33 August 3. Paid cash for supplies, $ 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

6 PAID CASH FOR INSURANCE
LESSON 2-2 6/23/2018 PAID CASH FOR INSURANCE page 34 August 4. Paid cash for insurance, $1, 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

7 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, $ 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

8 LESSON 2-2 6/23/2018 PAID CASH ON ACCOUNT page 36 August 11. Paid cash on account to Supply Depot, $ 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

9 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

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