Analyzing Transactions into Debit and Credit Parts

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Chapter 2

• Analyzing Transactions into Debit and Credit Parts

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Lesson 2-1Using T-Accounts

• The accounting equation can be represented as a T
  (page 28)
• Assets Liabilities Owners Equity
• Left side Right side
• T Account an accounting device used to analyze
  transactions

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T Account

• Special names for amounts recorded on left and
  right sides of T account
• Debit -- left side of T account
• Credit -- right side of T account
• Left side Right side
• DEBIT CREDIT

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Normal Balance

• Normal Balance the increase side of the account
• Assets have normal debit balances because assets
  are on left side of accounting equation
• Liabilities and Owners Equity have normal credit
  balances because they are on right side of
  equation.

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TWO BASIC ACCOUNTING RULES

• account balances increase on the normal balance
  side of an account.
• 2. account balances decrease on the side
  opposite of the normal balance side of an account.

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LESSON 2-2ANALZYING HOW TRANSACTIONS AFFECT
ACCOUNTS
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4 QUESTIONS TO ASK

• 1. What accounts are affected
• chart of account a list of accounts used
  by
• a business (PAGE 3)
• 2. How is each account classified?
• 3. How is each account balance changed?
• 4. How is each amount entered in the account?
• either debited or credited to the account