Chapter 2 Objectives Define accounting terms related to
Chapter 2 Objectives: • Define accounting terms related to analyzing transactions into debit and credit parts • Identify accounting practices related to analyzing transactions into debit and credit parts • Use T accounts to analyze transactions showing which accounts are debited or credited for each transaction • Analyze how transactions to set up a business affect accounts • Analyze how transactions affect owner’s equity accounts CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Lesson 2 -1: Using T Accounts Terms Review n T account—an accounting device used to analyze transactions n Debit—an amount recorded on the left side of a T account n Credit—an amount recorded on the right side of a T account n Normal balance—the side of the account that is increased CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -1
3 ANALYZING THE ACCOUNTING EQUATION page 28 The total of all assets on the left side of the accounting equation must always equal the total of all liabilities and owner’s equity on the right side. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -1
4 ACCOUNTS CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning page 29 LESSON 2 -1
5 ACCOUNT BALANCES page 29 The normal balance is the side of the account that is increased. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -1
6 INCREASES AND DECREASES IN ACCOUNTS page 30 Account balances increase on the normal balance side of an account. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -1
Lesson 2 -1: Using T Accounts Work Together 2 -1 on page 31 On Your Own 2 -1 on page 31 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 2 -2: Analyzing How Transactions Affect Accounts Term Review: Chart of Accounts—a list of accounts used by a business CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
9 RECEIVED CASH FROM OWNER AS AN INVESTMENT page 32 August 1. Received cash from owner as an investment, $5, 000. 2 1 4 4 3 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -2
10 PAID CASH FOR SUPPLIES page 33 August 3. Paid cash for supplies, $275. 00. 1 2 1 4 4 3 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -2
11 PAID CASH FOR INSURANCE page 34 August 4. Paid cash for insurance, $1, 200. 1 2 1 4 4 3 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -2
12 BOUGHT SUPPLIES ON ACCOUNT page 35 August 7. Bought supplies on account from Supply Depot, $500. 2 1 4 4 3 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -2
13 PAID CASH ON ACCOUNT page 36 August 11. Paid cash on account to Supply Depot, $300. 2 1 1 4 4 3 3 2 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -2
Lesson 2 -2: Analyzing How Transactions Affect Accounts Work Together 2 -2 on page 37 On Your Own 2 -2 on page 37 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 2 -3 Analyzing How Transactions Affect Owner’s Equity Accounts CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
16 RECEIVED CASH FROM SALES page 38 August 12. Received cash from sales, $295. 00. 2 1 4 4 3 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -3
17 SOLD SERVICES ON ACCOUNT page 39 August 12. Sold services on account to Oakdale School, $350. 00. 2 1 4 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -3
18 PAID CASH FOR AN EXPENSE page 40 August 12. Paid cash for rent, $300. 1 2 3 2 4 3 1 4 1. Which accounts are affected? 3 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -3
19 RECEIVED CASH ON ACCOUNT page 41 August 18. Received cash on account from Oakdale School, $200. 2 1 4 3 3 1. Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -3
20 PAID CASH TO OWNER FOR PERSONAL USE page 42 August 18. Paid cash to owner for personal use, $125. 00. 2 1 3 4 3 1 2 4 1. Which accounts are affected? 3 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -3
21 Lesson 2 -3: Analyzing How Transactions Affect Owner’s Equity Accounts Work Together 2 -3 on page 44 On Your Own 2 -3 on page 44 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2 -1
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