1. Chapter three
Accounting Equation

2. 3.1 The accounting elements
Assets
Liabilities
Owner’s Equity
Revenue
Expense
Net Income(Net loss)

3. New words and terms (3.1) Accounting equation
proprietorship / proprietor
future benefits
unwritten promise
owe to
accounts payable
withdrawal

4. New words and terms (3.1) Sales revenue service revenue
investment revenue
cost of goods sold
adminstrative expenses
selling expenses
financial expenses

5. 3.2 The Accounting Equation
Basic:
Assets= equities
= liabilities+owner’s equity
Variations:
owner’s equity=assets-liabilities
liabilities= assets- owener’s equity

6. 3.3 the effects of transactions on the accounting equation
Assets=Liabilities+Owner’s Equity
Revenues – Expenses= Net Income(loss)

7. owner invested $ 50 000 cash in the business
Transaction (1) :
owner invested $ cash in the business
Assets = liabilities + Owner’s Equity
cash Ted Andy, Capital

8. Transaction (2) : purchased office equipment on account, $ 2 500
Assets = Liabilites + Owner’s Equity
Cash+ office = Accounts Ted Andy, Capital
equipment payables = = =

9. Transaction (3) : purchased office supplies for cash, $ 350
Assets = Liabilites + Owner’s Equity
Cash+ office + office = Accounts Ted Andy, Capital
supplies equipment payables = =

10. Transaction (4) : paid amount owed to a creditor, $ 500
Assets = Liabilites + Owner’s Equity
Cash+ office + office = Accounts Ted Andy, Capital
supplies equipment payables = =

11. Transaction (5) : purchased office supplies on account, $ 400
Assets = Liabilites + Owner’s Equity
Cash+ office + office = Accounts Ted Andy, Capital
supplies equipment payables = = =

12. Transaction (6) : owner withdrew $ 300 for personal use
Assets = Liabilites + Owner’s Equity
Cash+office+office = Accounts + Ted’s– Ted ‘s+revenues-Expense
supplies equipment payables Capital Drawing = = =

13. Transaction (7) : received cash as payment for professional fees, $ 3 500
Assets = Liabilites + Owner’s Equity
Cash+office+office = Accounts + Ted’s– Ted ‘s+revenues-Expense
supplies equipment payables Capital Drawing = = =

14. Transaction (8) : paid office rent $ 1 000
Assets = Liabilites + Owner’s Equity
Cash+office+office = Accounts + Ted’s– Ted ‘s+revenues-Expense
supplies equipment payables Capital Drawing = = =

15. Transaction (9) : paid telephone expense, $ 75
Assets = Liabilites + Owner’s Equity
Cash+office+office = Accounts + Ted’s– Ted ‘s+revenues-Expense
supplies equipment payables Capital Drawing = = =

16. New words and terms (3.2&3.3) equity accounting equation offset
deposit
fiscal year
withdrawal
drawing