Analyzing Transactions

By Laurie L. Swanson

Principles of AccountingPractice Session #1

Analyzing a TransactionRecall the three questions you should ask when analyzing transactions.

1. What accounts are involved in the transaction?2. What is the classification of each account?3. What is happening to each account—is it

increasing or decreasing?

Analyzing a Transaction

Remember also that most transactions contain clues that help you identify the accounts involved in the transaction.

Further recall that each transaction will involve at least two different accounts.

Transaction Analysis Sheet

Use the Transaction Analysis Sheet to help you analyze the following transactions. Do not worry at this time about the order of your answers on the Transaction Analysis Sheet.

These transactions continue to use Jones Career Consulting.

Be sure to view this presentation as a Slide Show for the interaction to work properly.

Transaction Analysis Sheet

1. Provided $250 in services for a customer on account.

Accounts Receivable

Consulting Income Increasing

Asset Increasing

Revenue

What Accounts? What Classification? What Effect?

1.

Transaction Analysis Sheet

2. Paid employees salaries totaling $3,000.

Salaries Expense

Cash Decreasing

Expense Increasing

Asset

What Accounts? What Classification? What Effect?

2.

Transaction Analysis Sheet

What Accounts? What Classification? What Effect?

3.

3. Purchased office equipment on account, $1,200.

Office Equipment

Accounts Payable Increasing

Asset Increasing

Liability

Transaction Analysis Sheet

What Accounts? What Classification? What Effect?

4.

4. Received payment from a customer for services previously rendered.

Cash

Accounts Receivable Decreasing

Asset Increasing

Asset

Transaction Analysis Sheet

What Accounts? What Classification? What Effect?

5.

5. Karen Jones, the owner, withdrew $1,000 for personal use.

Cash

Karen Jones, Drawing Increasing

Asset Decreasing

Owner’s Equity

Transaction Analysis Sheet

What Accounts? What Classification? What Effect?

6.

6. Paid $350 for advertising.

Cash

Advertising Expense Increasing

Asset Decreasing

Expense

Transaction Analysis Sheet

What Accounts? What Classification? What Effect?

7.

7. Performed $225 in services for a customer who paid cash.

Cash

Consulting Income Increasing

Asset Increasing

Revenue

Transaction Analysis Sheet

What Accounts? What Classification? What Effect?

8.

8. Karen placed a personal computer with a market value of $800 into service for her business.

Computer

Karen Jones, Capital Increasing

Asset Increasing

Owner’s Equity

Transaction Analysis Sheet

What Accounts? What Classification? What Effect?

9.

9. Paid the $1,200 owed for previously purchased office equipment.

Accounts Payable

Cash Decreasing

Liability Decreasing

Asset

Analyzing Transactions

This ConcludesPractice Session #1