CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Chapter 2 Objectives: Define accounting terms related to analyzing transactions into debit and credit parts Identify accounting 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 Analyze how transactions to set up a business affect accounts Analyze how transactions affect owner’s equity accounts

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Lesson 2-1: Using T Accounts Terms Review T account—an accounting device used to analyze transactions Debit—an amount recorded on the left side of a T account Credit—an amount recorded on the right side of a T account Normal balance—the side of the account that is increased LESSON 2-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 2-1 ANALYZING THE ACCOUNTING EQUATION page 28 The total of all assets on the left side of the accounting equation must always equal the total of all liabilities and owner’s equity on the right side.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 2-1 ACCOUNTS page 29

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 2-1 ACCOUNT BALANCES page 29 The normal balance is the side of the account that is increased.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 2-1 INCREASES AND DECREASES IN ACCOUNTS page 30 Account balances increase on the normal balance side of an account.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Lesson 2-1: Using T Accounts Work Together 2-1 on page 31 On Your Own 2-1 on page 31

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2-2: Analyzing How Transactions Affect Accounts Term Review: Chart of Accounts—a list of accounts used by a business

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 2-2 RECEIVED CASH FROM OWNER AS AN INVESTMENT 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? August 1. Received cash from owner as an investment, $5, page Which accounts are affected?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 2-2 PAID CASH FOR SUPPLIES 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? August 3. Paid cash for supplies, $ page Which accounts are affected?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON Which accounts are affected? PAID CASH FOR INSURANCE 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts? August 4. Paid cash for insurance, $1, page 34

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 2-2 BOUGHT SUPPLIES ON ACCOUNT page 35 August 7. Bought supplies on account from Supply Depot, $ Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 2-2 PAID CASH ON ACCOUNT page 36 August 11. Paid cash on account to Supply Depot, $ Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Lesson 2-2: Analyzing How Transactions Affect Accounts Work Together 2-2 on page 37 On Your Own 2-2 on page 37

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 2-3 Analyzing How Transactions Affect Owner’s Equity Accounts

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 2-3 RECEIVED CASH FROM SALES page 38 August 12. Received cash from sales, $ Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON 2-3 SOLD SERVICES ON ACCOUNT page 39 August 12. Sold services on account to Oakdale School, $ Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 2-3 PAID CASH FOR AN EXPENSE page 40 August 12. Paid cash for rent, $ Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 2-3 RECEIVED CASH ON ACCOUNT page 41 August 18. Received cash on account from Oakdale School, $ Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 2-3 PAID CASH TO OWNER FOR PERSONAL USE page 42 August 18. Paid cash to owner for personal use, $ Which accounts are affected? 2. How is each account classified? 3. How is each classification changed? 4. How is each amount entered in the accounts?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Lesson 2-3: Analyzing How Transactions Affect Owner’s Equity Accounts 21 LESSON 2-1 Work Together 2-3 on page 44 On Your Own 2-3 on page 44