1. Changes in Financial Statement

2. Business Transactions
Any event that causes the financial position of a business to change.
E.g. buying a truck

3. Source Document
When an asset, liability, or equity item is recorded for accounting purposes, a business paper or document is required to verify the dollar amount. The business paper is called a source document.
E.g. hydro bills, telephone bills, cheque copies, store receipts, cash register summaries, and credit card slips.
Points to remember…...
Accounting entries are made from business papers known as source documents
Source documents are kept on file for reference purposes and are proof of transactions

4. Objectivity Principle
This Principle requires that a business’s accounting be recorded on the basis of clear, verifiable evidence not on personal feelings, opinions or emotions.

5. Transaction analysis Sheet
Is a tool for displaying individual transactions and the new financial position resulting from each transaction. It is ideal for analyzing and recording changes in financial position.

6. 2 Things that cause Owner’s Equity to increase
Investment of assets by owner into the business
Revenue

7. 2 Things that cause owner’s Equity to decrease
Withdrawals of assets by the owner out of the business
Expenses

8. Transaction analyses Scott invests $20000 to start the business
The accounts involved are
Cash(asset)
Owner’s Capital(Equity)

9. Assets =
Liabilities +
Owner’s Equity
Cash
Supplies
Equipment
Accounts payable
Notes Payable
Owner’s Capital
20000
$20000
$20000

10. Transaction analysis Purchased supplies paying $1000 cash Cash (asset)
Supplies (asset)

11. Assets =
Liabilities +
Owner’s Equity
Cash
Supplies
Equipment
Accounts Payable
Notes payable
20000
(1000)
1000
19000
$20000
$20000

12. Transaction Analyses Purchased an Equipment for $15000
The Accounts Involved are
Cash(asset)
Equipment(asset)

13. Assets =
Liabilities +
Owner’s Equity
Cash
Supplies
Equipment
Accounts Payable
Notes payable
Owner’s Capital
20000
(1000)
1000
(15000)
15000
4000
$20000
$20000

14. Transaction Analysis
Purchased supplies of $200 and Equipment of $1000 on account
The accounts Involved are
Supplies(asset)
Equipment(asset)
Accounts Payable(liability)

15. Assets =
Liabilities +
Owner’s Equity
Cash
Supplies
Equipment
Accounts Payable
Notes payable
Owner’s Capital
20000
(1000)
1000
(15000)
15000
200
1200
4000
16000
$21200
$21200