1. Charpter four
Accounting methods

2. 4.1 The Double-Entry System of Accounting
Debit side
Credit side
Luca Paciolio:
Italian mathematician and Franciscan friar
the father of accounting
Summa de arithmetica, geometria, proportioni et proportionalita

3. New words and terms 4.1
Double-entry accounting
Debit
Credit
balance

4. 4.2 The Account The T- Accounts Four-Column Account Format
Normal balance of an account
The chart of accounts

5. The T-account
Title Dr Cr
Notes：
The increase and decrease should be recorded seperatly on debit side or credit side of every accounts

6. Four-column account format
Account: *** Accout No:***
Date
Item
Post.
Ref.
Debit
Credit
Balance

7. New words and terms 4.2 Increases Decreases Account classification
T-account
entry
running balance
post
JR=Journal Reference

8. New words and terms 4.2 debit-balance accounts credit-balnace accounts
permanent accounts
temporary accounts
overdraw
overpay
miscellaneous expense

9. 4.3 Debits and Credits The symbol of debit and credit Debit side: Dr
Credit side: Cr
The rules of debit and credit

10. Liabilities Assets Owner’s equity Beginning balances Beginning
XXX
XXX
increase
XXX
decrease
XXX
decrease
XXX
increase
XXX
Ending
balances
Ending
balances
XXX
XXX

11. Summary + - Account elements The effects Debit Credit balances Assets
Debits
Liabilites
Owner’s Equity
Credits
Revenues no
Expenses

12. 4.4 Applying for Double-Entry Accounting
use of assets, liabilities and owner’s equity
use of revenues, expenses and net income

13. owner invested $ 30 000 cash in the business
Transaction (1) :
owner invested $ cash in the business
Assets = liabilities + Owner’s Equity
cash Ted Andy, Capital

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

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

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

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

18. 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 =

19. 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 =

20. 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 =

21. 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 =