Transactions that affect Assets, Liabilities, and Owner’s Equity

1. Transactions that affect Assets, Liabilities, and Owner’s Equity Chapter 4

2. Accounts and the Double-Entry Accounting System • Chart of Accounts – A list of all accounts used by a business. • Account – record of changes and balances of a specific asses, liability or component of owner’s equity. • Ledger – Sometimes called the “General Ledger” it is a group of accounts • Double-Entry Accounting- Tracks every transaction as a debit or credit to organize and keep the accounting equation in balance. Pgs 78-79

3. Pg 79

4. T Accounts • T-Accounts divide each account into a Debit and Credit side. • The left side is always the DEBIT side • The right side is always the CREDIT side • Every account has a Normal Balance side meaning either a natural debit or credit balance. • The Debit side and Credit side distinguish whether an account balance is increasing or decreasing. • Accounts always increase on their Normal Balance side and decrease on the opposite side. • Assets’ Normal Balance side is always Debit • Liabilities and Owner’s Equity Accounts’ Normal Balance side is always Credit. Pgs 79-80

5. T Accounts Asset Accounts = Liabilities + Owner’s Equity Credit - Decrease Debit + Increase Normal Balance Debit - Decrease Credit + Increase Normal Balance Credit + Increase Normal Balance Debit - Decrease Do Problem 4-1 Together. Pg 85 WP 34 Pgs 80-82

6. Pgs 84-87 T Accounts