CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 5-1 Checking Accounts.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 1-3 How Transactions Change...
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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 1-3 LESSON 1-3 How Transactions Change Owner’s Equity in an Accounting Equation
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Transcript of CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 1-3 How Transactions Change...
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 1-3LESSON 1-3
How Transactions Change Owner’s Equity in an Accounting Equation
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Activating StrategyActivating Strategy
Assets=Liabilities + Owner’s Equity
What will happen to the accounting equation when we provide a service to our cash customer?
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LESSON 1-3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
NotesNotes
Revenue Sale of goods or performing a service Causes an increase in owner’s equity Normal business operation
Sale on account Charge sale, money will be received later
REALIZATION OF REVENUE CONCEPT Recording revenue at the time of the sale
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LESSON 1-3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Notes continuedNotes continued
Expense Non-recoverable cost or consumed (used) asset Causes a decrease in owner’s equity Normal business operation Examples: advertising, rent, miscellaneous
Withdrawal when an asset is taken out of a business for the owner’s
personal use Causes a decrease in owner’s equity Example: withdrawing cash for personal use
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LESSON 1-3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Notes continuedNotes continued
Four Items that affect Owner’s Equity Capital –increase Revenue – increase Expense – decrease Drawing - decrease
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LESSON 1-3
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 1-3
REVENUE TRANSACTIONSREVENUE TRANSACTIONS
Transaction 6 August 12. Received cash from sales, $295.00.
Transaction 7 August 12. Sold services on account to Oakdale School, $350.00.
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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 1-3
EXPENSE TRANSACTIONSEXPENSE TRANSACTIONS
Transaction 8 August 12. Paid cash for rent, $300.00.
Transaction 9 August 12. Paid cash for telephone bill, $40.00.
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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 1-3
OTHER CASH TRANSACTIONSOTHER CASH TRANSACTIONS
Transaction 10 August 18. Received cash on account from Oakdale School, $200.00.
Transaction 11 August 18. Paid cash to owner for personal use, $125.00.
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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
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LESSON 1-3
TERMS REVIEWTERMS REVIEW
revenue sale on account expense withdrawals
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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
Notes – Read page 18 Explore AccountingNotes – Read page 18 Explore Accounting
GAAP Generally Accepted Accounting Principles Rules or practices used by accountants when recording or
reporting financial information
SEC Security and Exchange Commission By law have the authority to set the GAAP
FASB Financial Accounting Standards Board Organization who actually sets the GAAP
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LESSON 1-3
