1. Unit 3 Recording Transactions in T- Accounts

2. From Unit 2: CashAcct Rec Equipment Building Acct PayBank Loan Capital

3. From Unit 2: Information from balance sheet- CashAcct Rec Equipment Building Acct PayBank Loan Capital 1000 500 2000 40000 2500 20000 21000

4. There must be at least two entries (dual entry accounting) to keep the balance sheet balanced. CashAcct Rec Equipment Building Acct PayBank Loan Capital 1000 500 2000 40000 2500 20000 21000 Sept 21 +200 -200 1200 300 2000 40000 2500 20000 21000

5. Asset and Liability transaction: CashAcct Rec Equipment Building Acct PayBank Loan Capital 1000 500 2000 40000 2500 20000 21000 Sept 21 +200 -200 1200 300 2000 40000 2500 20000 21000 Sept 23 -500 -500 700 300 2000 40000 2000 20000 21000

6. What was this transaction? CashAcct Rec Equipment Building Acct PayBank Loan Capital 1000 500 2000 40000 2500 20000 21000 Sept 21 +200 -200 1200 300 2000 40000 2500 20000 21000 Sept 23 -500 -500 700 300 2000 40000 2000 20000 21000 Sept 24 +3000 +3000

7. Unit 3: T-Accounts To more easily reflect the changes that transactions create, we will learn the concept of T- Accounts. Essentially each item in the balance sheet becomes its own separate account. We describe each side of the “T” as a Debit or a Credit.

9. T-Accounts may look something like this: Note: Assets balances all always Debits and grow on Debit side Liabilities and Capital always Credits and grow on Debit side!

10. Cash $500 Sept 20 $300 $800$200Sept 24 Balance $600 T- Account Transactions: Acct Rec $400 $300Sept20 Balance $100 Bank Loan $5000 Sept 24 $200 Balance $4800