1. How Transactions Change Owner’s Equity in an Accounting Equation
Section 1-3

2. Terms Revenue (Sales)- Sale on Account (Asset)-
An increase in owner’s equity/capital resulting from the operation of a business (making a sale).
Sale on Account (Asset)-
A sale for which cash will be received at a later date. (Accounts Receivable)
The customer takes the product and does not give you cash!

3. Terms Continued Expense-
A decrease in owner’s equity resulting from the operation of a business.
Advertising
Utilities
Insurance
Miscellaneous
Supplies

4. Terms Continued Withdrawals-
Assets taken out of a business for the owner’s personal use. (The owner pays himself/herself (paycheck)) CASH
(The owner removes product from the store to keep) INVENTORY

5. Received cash from Sales, $295.00
Examples of Transactions Affecting the Accounting Equation and Accounts Affected
Received cash from Sales, $295.00
Cash (+ Left)
Capital (+ Right)
Pg. 14

6. Transaction 7 Sold Services on Account, $350.00
Accounts Receivable (+Left)
Capital (+ Right)
Pg. 14

7. Transactions 8 & 9
Paid Cash for Goods/Services (Rent, $300.00, Phone, $40.00)
Cash (- Left)
Capital (- Right)
Pg. 15

8. Transaction 10 Received cash on account from Oakdale School, $200.00
Cash + Left
Accounts Receivable – Left
Pg. 16

9. Transaction 11 Paid Cash to owner for personal use, $125.00
Cash – Left
Capital – Right
Pg. 16

10. Working Together & On Your Own
Textbook Pg. 17
Workbook Pgs. 9 & 10