4.3 – Account Balances & Terminology Chapter 4

What is the Balance in the Cash T-Account (Ledger)? 2

 1. ___________________of the account ______ writing the balance of each side beneath the last item on each side.  2. _____________the _______________________ total and record it ____________________.  3. __________the __________ amount. Calculating the Balance of an Account

Calculate all the Balances of the T-Accounts 4

 This is the balance in each of the ledger accounts and the side it is written on represents if it is a _______ balance or a ________balance.  Usually:  Assets have a _________Balance  Liabilities have a _______Balance  Owner’s Equity has a ________Balance __________= _____________ What do these balances represent?

 Sometimes an asset account might have a credit balance or a liability will have a debit balance. For instance:  If the business takes out more cash than is in their bank account because they have an overdraft agreement, then the cash would have a credit balance.  Your business overpays an accounts payable balance then it will end up with a debit balance.  These balances don’t usually have an exceptional balance for long. Exceptional Account Balances

__________________– when a business buys from another business, they are usually given terms that allow them to pay for the goods at a later date. Here is some terminology: 1. ________________– items are received from a supplier but not paid for.  ___________________________________ 2. _____________– items are sold but the customer will pay later.  _______________________________ Interpreting Transactions

3. _____________– you have paid money to a creditor (Accounts Payable)  ______________________________ 4. _________________– a customer has paid a debt that they owe you.  _______________________________ Interpreting Transactions

How it looks in a T-account

 A. Received $180 from M. Coburn on account.  B. Paid $100 to Tri Tech Computers on account.  C. Performed a $200 service for G. Vanderveen on account.  D. Purchased $300 of office furniture from Office Outfitters on account. Your Turn – What is the transaction for each situation.