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Starting a Proprietorship

Starting a Proprietorship. Lecture Presentation 3-1 Analyzing Transactions into Debit and Credit Parts. Learning Objectives. Define and Identity terms and practices related to analyzing transactions into debit and credit parts

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Starting a Proprietorship

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  1. Starting a Proprietorship Lecture Presentation 3-1 Analyzing Transactions into Debit and Credit Parts

  2. Learning Objectives • Define and Identity terms and 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

  3. Some Vocabulary  • Quick Review • Accounts are a record that summarize all the information pertaining to a single item in the accounting equation • Transactions change the balances of accounts in the accounting equation (A = L + OE) • T account = An accounting device used to analyze transactions • Debit = An amount recorded on the left side of the T account • Credit = An amount recorded on the right side of the T account

  4. T Account Any Asset Any Liability & OE T accounts and the Accounting Equation Assets = Liabilities + Owner’s Equity Left Side Right Side Debit Credit Normal Balance Debit Credit Normal Balance Normal Balance= The side of the account that is increased

  5. T Account Assets = Liabilities + Owner’s Equity Any Asset Any Liability or Owner’s Capt. Acct. Debit Credit Normal Balance Debit Credit Normal Balance Increases and Decreases in Accounts

  6. Term Review & Audit Understanding • T account • Debit • Credit • Normal balance • Draw the accounting equation on a T account • What are the two accounting rules that regulate increases and decreases of account balances? • Acct. Balances increase on the normal balance side • Acct. Balances decrease on the side opposite the NB side

  7. Work Together/On Your Own • Page 31…Work Together 2-1 • Page 31…On Your Own 2-1 • Page …46 • Application Problem 2-1 • Page 50… • Answer Critical Thinking Questions 1 & 2

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