1. Analyzing Transactions into debit and credit parts Chapter 3

2. Using T-Accounts T-Account- An accounting device used to analyze transactions. Assets = Liabilities and Owner’s Equity

3. Using T-Accounts Debit- An amount recorded on the Left side of the t-account Credit- An amount recorded on the left side of the t-account Assets = Liabilities and Owner’s Equity DEBITCREDIT

4. Using T-Accounts Normal Balance- the side of the account that is increased Assets = Liabilities and Owner’s Equity Any Asset Debit Normal Balance Credit

5. Using T-Accounts Normal Balance- The side of the account that is increased Assets = Liabilities and Owner’s Equity Any Liability DebitCredit Normal Balance

6. Using T-Accounts Normal Balance- The side of the account that is increased Assets = Liabilities and Owner’s Equity Owner’s Equity Account DebitCredit Normal Balance

7. Using T-Accounts The normal side is the side that increases Assets = Liabilities and Owner’s Equity Any Asset Debit Normal Balance Credit

8. Using T-Accounts The normal side is the side that increases Assets = Liabilities and Owner’s Equity Any Liability DebitCredit Normal Balance

9. Using T-Accounts The normal side is the side that increases Assets = Liabilities and Owner’s Equity Owner’s Equity Account DebitCredit Normal Balance

10. Analyzing how transactions affect accounts Questions to ask yourself ◦Which accounts are being affected ◦How is each account classified ◦How is each classification changed ◦How is each amount entered in the account

11. Analyzing how transactions affect accounts Aug. 1 Received cash from owner as an investment, $10,000. ◦Which accounts are being affected  Cash and Capital ◦How is each account classified  Cash is an asset and Capital is an OE. ◦How is each classification changed  Assets are increased. OE is increased. ◦How is each amount entered in the account  Assets increase on the debit side- Therefore the 10,000 will go on the debit side of the Cash T-Account  OE increase on the credit side- Therefore the 10,000 will go on the credit side of the Capital T-Account

12. Analyzing how transactions affect accounts Aug. 3 Paid cash for supplies, $1,577 ◦Which accounts are being affected  Supplies and Cash ◦How is each account classified  Supplies and cash are both assets ◦How is each classification changed  Supplies (asset) is being increased  Cash (asset) is being decreased ◦How is each amount entered in the account  Assets increase on the debit side- Therefore $1,577 will go on the debit side of the Supplies T-Account  Assets decrease on the credit side- Therefore $1,577 will also go on the credit side of the Cash T-Account