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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 1-2 How Business Activities Change the Accounting Equation Objectives Define accounting.

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Presentation on theme: "CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 1-2 How Business Activities Change the Accounting Equation Objectives Define accounting."— Presentation transcript:

1 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 1-2 How Business Activities Change the Accounting Equation Objectives Define accounting terms related to starting a service business organized as a proprietorship and to changes that affect the accounting equation. Identify accounting concepts and practices related to starting a service business organized as a proprietorship and to changes that affect the accounting equation. Classify accounts as assets, liabilities, or owners equity and demonstrate their relationships in the accounting equation. Analyze how transactions affect the accounts in an accounting equation.

2 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning What we will be covering Explain and demonstrate receiving cash, page 10. Explain and demonstrate paying cash, page 11. Explain and demonstrate transactions on account, page LESSON 1-2

3 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 1-2 RECEIVING CASH Transaction 1 August 1. Received cash from owner as an investment, $5, (START UP INVESTMENT) page 10

4 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 1-2 PAYING CASH Transaction 2 August 3. Paid cash for supplies, $ (Building inventory).. Transaction 3 August 4. Paid cash for insurance, $1, page 11

5 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 1-2 TRANSACTIONS ON ACCOUNT Transaction 4 August 7. Bought supplies on account from Supply Depot, $ Transaction 5 August 11. Paid cash on account to Supply Depot, $ page 12

6 Working Together 1-2 P.13 6 Determining how transactions change an accounting equation Write the answers to the following transactions in the working papers. For each transaction, place a plus (+) in the appropriate column if the classification is increased. Place a minus (-) in the appropriate column if the classification is decreased Trans. No. Assets = Liabilities + Owners Equity Bought supplies on account 2.Received cash from owner as an investment. 3.Paid cash for insurance 4.Paid cash on account , - -

7 On your own 1-2 P.13 7 LESSON 1-2 Trans. No. Assets = Liabilities + Owners Equity Determining how transactions change an accounting equation Write the answers to the following transactions in the working papers. For each transaction, place a plus (+) in the appropriate column if the classification is increased. Place a minus (-) in the appropriate column if the classification is decreased 1.Received cash from owner as investment 2.Bought supplies on account 3.Paid cash for supplies 4.Paid cash for insurance 5.Paid cash on account , - - -

8 8 LESSON 1-2 TERMS REVIEW transaction account account title account balance capital ASSIGNMENT: Application Problem 1-2 p When done, hand in. Plus Part Three of study guide p.3 Determining how transactions change an accounting equation.

9 Trans. No. Assets = Liabilities + Owners Equity Accts. Pay Accts Pay Calvin Five Star Riverland Parrish Cash + Supplies +Insurance = Supply + Co. + Capital Beg. Bal Beg. Bal 2. Beg. Bal 3. Beg. Bal 4. Beg. Bal 5. Beg. Bal 6. Beg. Bal 7. Beg. Bal 8. New Bal. 1-2 APPLICATION PROBLEM +3,000 -1,600 3,000 1, , , ,600 1, ,000 1, , , ,100 1,000 1,100 1, ,500 3,000 +1, , ,500 0


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