1. HOW BUSINESS ACTIVITIES CHANGE THE ACCOUNTING EQUATION Chapter 1 – Section 2

2. Receiving Cash Transaction = Activity that changes assets, liabilities, or owner’s equity.  What is Unit of Measurement? Account – Record that holds all the information for a single item in the accounting equation. Account title – it’s name Account Balance – the running total Capital – total amount of owner’s equity

3. Company Receives Cash from Owner Assets = Liabilities + Owner’s Equity Cash=Kim Park, Capital +$5,000=+$5,000

4. Company Pays Cash Assets = Liabilities + Owner’s Equity Cash+ Supplies + P/I=Kim Park, Capital +$5,000 =+$5,000 -275+275 - 1200+1200 $3,525$275$1,200$0$5,000

5. Transactions on Account Assets = Liabilities + Owner’s Equity Cash+ Supplies + P/I=A/PKP, Capt. 3,525 2751,200=05,000 +500+500 3525 7751,200=5005,000-300 3,225 7751,200=2005,000