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Using T-Accounts to Help Analyze Transactions PowerPoint PPT Presentation


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Using T-Accounts to Help Analyze Transactions. What you already (should) know!. Basic Accounting Equation Assets = Liabilities + Owner’s Equity Assets Anything of value owned by a business. Liability Anything owed by a business Owner’s Equity

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Using T-Accounts to Help Analyze Transactions

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Using t accounts to help analyze transactions l.jpg

Using T-Accounts to Help Analyze Transactions


What you already should know l.jpg

What you already (should) know!

  • Basic Accounting Equation

    • Assets = Liabilities + Owner’s Equity

  • Assets

    • Anything of value owned by a business.

  • Liability

    • Anything owed by a business

  • Owner’s Equity

    • The rights the owner has to the things owned by the business.


What you are going to learn l.jpg

What you are going to learn

  • T-Accounts

    • A simple tool used to aid in the analysis of business transactions.

  • T-Accounts are an extension of the basic accounting equation

    • Much more orderly way of keeping track of stuff.


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Account Title

Debit

Credit


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Basic Accounting Equation as a HUGE T-Account

Debit

Credit

ASSETS

LIABILITIES

OWNER’S EQUITY


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So What?

  • Anything classified as an asset increases on the debit (left) side.

  • Anything classified as a liability or owner’s equity increases on the credit (right) side.

  • The side that increases any account in called the normal balance side.

  • The words debit and credit only mean left and right, nothing more or less!


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For every action…

  • Every business transaction must have at least one debit and one credit.


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How Do We Classify

  • Memorization at first

  • It will eventually become intuitive


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Suggestions for Learning How to Analyze and Classify Transactions

  • Take good notes of examples

    • There are only a few basic types of transactions

  • Review examples, looking for similarities

  • A great deal of prayer… 


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T-Account Practice Sheet (later)

Good Examples


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