Analyzing Transactions into debit and credit parts Chapter
Analyzing Transactions into debit and credit parts Chapter 3
�T-Account- An accounting device used to analyze transactions. Assets = Liabilities and Owner’s Equity 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 DEBIT = Liabilities and Owner’s Equity CREDIT Using T-Accounts
�Normal Balance- the side of the account that is increased Assets = Liabilities and Owner’s Equity Any Asset Debit Credit Normal Balance Using T-Accounts
�Normal Balance- The side of the account that is increased Assets = Liabilities and Owner’s Equity Any Liability Debit Credit Normal Balance Using T-Accounts
�Normal Balance- The side of the account that is increased Assets = Liabilities and Owner’s Equity Account Debit Credit Normal Balance Using T-Accounts
�The normal side is the side that increases Assets = Liabilities and Owner’s Equity Any Asset Debit Credit Normal Balance Using T-Accounts
�The normal side is the side that increases Assets = Liabilities and Owner’s Equity Any Liability Debit Credit Normal Balance Using T-Accounts
�The normal side is the side that increases Assets = Liabilities and Owner’s Equity Account Debit Credit Normal Balance Using T-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 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 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 Analyzing how transactions affect accounts
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