Objectives of this lesson
This presentation is the property of its rightful owner.
Sponsored Links
1 / 30

Objectives of this Lesson PowerPoint PPT Presentation


  • 56 Views
  • Uploaded on
  • Presentation posted in: General

Objectives of this Lesson. Review terms (Assets, Liabilities Owner’s Equity) Learn the Accounting Equation Analyze transactions using the accounting equation. Refresher Course - Asset. Do you remember what an asset is?.

Download Presentation

Objectives of this Lesson

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Objectives of this lesson

Objectives of this Lesson

  • Review terms (Assets, Liabilities Owner’s Equity)

  • Learn the Accounting Equation

  • Analyze transactions using the accounting equation

Developed by Mary Ann Korson


Refresher course asset

Refresher Course - Asset

Do you remember what an asset is?

It’s all the “good stuff” a business owns (cash, accounts receivable, supplies, car, building & equipment)

Developed by Mary Ann Korson


Refresher course liability

Refresher Course - Liability

You’re doing great! Now, do you remember what a liability is?

Other people’s claims to the business’s stuff. It’s amounts that the business owes others. – It’s similar to buying a TV and paying for it with a credit card.

Developed by Mary Ann Korson


Refresher course equity

Refresher Course - Equity

It’s the good stuff left over for the owner after all the liabilities (amounts owed) have been paid.

Now for the last review question, do you remember what equity is?

Developed by Mary Ann Korson


Accounting equation analogy

Accounting Equation Analogy

In the accounting world everything is about “balance”

Think of a the Soo Locks, no boats can go through until the water level is the same on both sides.

www.boldts.net/ Sault2.shtml

Developed by Mary Ann Korson


Accounting equation

Accounting Equation

The formal equation is …

Assets = Liabilities + Equity (net worth)

Assets

Liabilities + Owner’s Equity

=

Developed by Mary Ann Korson


Double entry accounting

Double Entry Accounting

Recall working with transactions...

  • Every transaction needs to be recorded in at least

2 places

It’s all about

Balance!

Developed by Mary Ann Korson


Transaction analysis

Transaction Analysis

Assets

=

Liabilities + Owner’s Equity

Water level

Gate

We will be using the same Soo

Lock analysis as we go through

the lesson.

Developed by Mary Ann Korson


Transactions assets change

Transactions - Assets Change

Assets

=

Liabilities + Owner’s Equity

Supplies

Cash

The water level stays the

same because one asset

increased & one decreased

Bought $20 of supplies and paid $20 cash. Everything is still in balance!

Developed by Mary Ann Korson


Transactions assets increase liabilities increase

Transactions - Assets Increase & liabilities increase

Assets

=

Liabilities + Owner’s Equity

Acct Pay

Supplies

The water level stays the same because

both sides of the door were increased

at the same level.

Bought $20 of supplies and you will pay $20 later(ON ACCOUNT). Everything is still in balance!

Developed by Mary Ann Korson


Transactions assets increase owner s equity increases

Transactions - Assets Increase & Owner’s Equity Increases

Assets

=

Liabilities + Owner’s Equity

Equity

cash

The water level stays the same because

both sides of the door were increased

at the same level.

Received $100 cash for lawn mowing services performed$100. Everything is still in balance!

Developed by Mary Ann Korson


Transactions assets decrease equity

Transactions - Assets Decrease & Equity ?

Assets

=

Liabilities + Owner’s Equity

Make a prediction, if assets decreased,

what do you think would happen to

equity on the right side of the gate?

Click the arrows below.

Developed by Mary Ann Korson


Transactions assets decrease equity does not increase

Transactions - Assets Decrease & Equity does NOT Increase

=

Assets

Liabilities + Owner’s Equity

Oops! If assets decrease and they’re

on the left side of the gate, we still

need to keep our water level in balance.

Try Again

Developed by Mary Ann Korson


Transactions assets decrease equity decreases

Transactions - Assets Decrease & Equity Decreases

=

Assets

Liabilities + Owner’s Equity

Excellent, since the left side

decreased, the right side of the

gate also decreases & the water

level stays balanced.

Developed by Mary Ann Korson


Transaction paid cash for rent expense

Transaction – Paid cash for rent expense

=

Assets

Liabilities + Owner’s Equity

cash

Equity

We paid cash, so our asset account

decreased. Owner’s Equity decreased

because we incurred a “cost/expense”

of the business.

Paid $500 cash for rent expense $500. Everything is still in balance!

Developed by Mary Ann Korson


Transaction paid cash on account

Transaction – Paid cash On Account

=

Assets

Liabilities + Owner’s Equity

Acct Pay

cash

We paid cash, so our asset account

decreased. Our liability decreased

because we paid off our bill &the

amount we owe went down.

Paid $500 cash to Bay Office Supply on account. Everything is still in balance!

Developed by Mary Ann Korson


Transaction paid cash to owner for personal use

Transaction – Paid cash to owner for personal use

=

Assets

Liabilities + Owner’s Equity

Equity

Cash

We paid cash, so our asset account

decreased. Our equity in the business

decreased because we have less money

available for business use.

Paid $125 cash to the owner for personal use (withdrew $125) Everything is still in balance!

Developed by Mary Ann Korson


Check review purchase supplies for cash

Check & Review Purchase Supplies for Cash

If your purchased supplies for cash, how would your accounts be affected?

  • Supplies increased & Cash increased

  • Supplies increased & equity decreased

  • Supplies increased & cash decreased

  • Supplies decreased & cash increased

Developed by Mary Ann Korson


Objectives of this lesson

Great job!!!

You purchased supplies, so supplies increased. Also, you paid for the supplies with cash. Since you paid cash, cash decreased.

Developed by Mary Ann Korson


Check review purchase supplies for cash1

Check & Review Purchase Supplies for Cash

Oops, Let’s think…

  • You did purchase supplies, so ask yourself, “Did the amount of supplies I own go up or down?

  • Also, think about how you paid for the supplies & re-try.

Developed by Mary Ann Korson


Check review paid cash on account

Check & Review Paid cash on account

If your paid cash to ABC Corp. for your account balance, how would your accounts be affected?

  • Cash increased & accounts payable increased

  • Cash decreased & accounts payable decreased

  • Cash decreased & accounts payable increased

Developed by Mary Ann Korson


Check review paid cash on account 1

Check & Review Paid Cash on Account #1

Oops, Let’s think…

  • Since you paid cash, ask yourself how was cash affected.

  • 2nd ask yourself did the amount you owe ABC go up or down after you paid them.

Developed by Mary Ann Korson


Objectives of this lesson

Great job!!!

You paid cash, so cash decreased. Also, your liability decreased because you paid off your bill. Now you owe less money to ABC Corp.

Developed by Mary Ann Korson


Terms review exercise

Terms Review Exercise

  • Amounts you owe

  • Assets = Liab + Owner Equity

  • The good stuff!@

  • Amount left over after you pay off your bills

  • Assets

  • Liabilities

  • Owner’s Equity

  • Accounting Equation

Developed by Mary Ann Korson


Terms review exercise1

Terms Review Exercise

  • Amounts you owe

  • Assets = Liab + Owner Equity

  • The good stuff!@

  • Amount left over after you pay off your bills

  • Assets

  • Liabilities

  • Owner’s Equity

  • Accounting Equation

Developed by Mary Ann Korson


Terms review exercise2

Terms Review Exercise

  • Amounts you owe

  • Assets = Liab + Owner Equity

  • The good stuff!@

  • Amount left over after you pay off your bills

  • Assets

  • Liabilities

  • Owner’s Equity

  • Accounting Equation

Developed by Mary Ann Korson


Terms review exercise3

Terms Review Exercise

  • Amounts you owe

  • Assets = Liab + Owner Equity

  • The good stuff!@

  • Amount left over after you pay off your bills

  • Assets

  • Liabilities

  • Owner’s Equity

  • Accounting Equation

Developed by Mary Ann Korson


Terms review

Terms Review

  • Amounts you owe

  • Assets = Liab + Owner Equity

  • The good stuff!@

  • Amount left over after you pay off your bills

  • Assets

  • Liabilities

  • Owner’s Equity

  • Accounting Equation

Developed by Mary Ann Korson


Concept review

Concept Review

Assets

=

Liabilities + Owner’s Equity

Water level

Gate

Just remember our analogy –

For the gate to work, you always

need to include 2 parts for every

transaction to stay balanced.

Developed by Mary Ann Korson


Where we are headed

Where we are headed…

Next time we’ll expand by

learning about Debits &

Credits. Keep up the great work & remember – our concepts will keep building upon each other!

Developed by Mary Ann Korson


  • Login