1. Transactions that affect Assets, Liabilities, and Owner’s Equity
Chapter 4

2. Accounts and the Double-Entry Accounting System
Chart of Accounts – A list of all accounts used by a business.
Account – record of changes and balances of a specific asses, liability or component of owner’s equity.
Ledger – Sometimes called the “General Ledger” it is a group of accounts
Double-Entry Accounting- Tracks every transaction as a debit or credit to organize and keep the accounting equation in balance.
Pgs 78-79

3. Roadrunner Delivery Service
1550 Gateway Blvd.
Sacramento, CA 94230
Chart of Accounts
Assets
101
Cash in Bank
105
Accounts Receivable – City News
110
Accounts Receivable – Green Company
115
Computer Equipment
120
Office Equipment
125
Delivery Equipment
Liabilities
201
Accounts Payable – Beacon Advertising
205
Accounts Payable – North Shore Auto
Owner’s Equity
301
Maria Sanchez – Capital
302
Maria Sanchez – Withdrawals
Revenue
401
Delivery Revenue
Expenses
501
Advertising Expense
505
Maintenance Expense
510
Rent Expense
515
Utilities Expense
Pg 79

4. T Accounts
T-Accounts divide each account into a Debit and Credit side.
The left side is always the DEBIT side
The right side is always the CREDIT side
Every account has a Normal Balance side meaning either a natural debit or credit balance.
The Debit side and Credit side distinguish whether an account balance is increasing or decreasing.
Accounts always increase on their Normal Balance side and decrease on the opposite side.
Assets’ Normal Balance side is always Debit
Liabilities and Owner’s Equity Accounts’ Normal Balance side is always Credit.
Pgs 79-80

5. T Accounts Asset Accounts = Liabilities + Owner’s Equity Debit +
Increase
Normal
Balance
Credit -
Decrease
Debit -
Decrease
Credit +
Increase
Normal
Balance
Debit -
Decrease
Credit +
Increase
Normal Balance
Do Problem 4-1 Together. Pg 85 WP 34
Pgs 80-82

6. Pgs 84-87
T Accounts