1. Analyzing Transactions into Debit and Credit Parts
Chapter 3

2. Analyzing the Accounting Equation
The accounting equation can be represented by a T
Assets
Liabilities + Owner’s Equity =

3. T Account An accounting device used to analyze transactions Right Side
Credit Side
Left Side
Debit Side

4. Debits and Credits Debit-An amount recorded on the left side
Abbreviation DR
Credit-An amount recorded on the right side
Abbreviation CR

5. Normal Balances The side of the account that is increased
Account balances increase on the normal balance side of an account.
Account balances decrease on the side opposite the normal balance side of an account.

6. Chart of Accounts
A list of accounts used by a business

7. ?’s for Analyzing Transactions into DR and CR Parts
Which accounts are affected?
How is each account classified?
How is each classification changed?
How is each amount entered in the accounts?
Use these every time a transaction is analyzed.

8. Where do Expenses and Drawing Go?
Both expenses and Drawing decrease the owner’s equity account, therefore their normal balance is DR.