1. Debit and Credit (Using “T” Accounts)
Chapter 2
Analyzing Transactions into Debit and Credit Parts

2. DO NOW: In your notebook
What do you know about debits and credits?

3. The Accounting Equation – It’s really not efficient

4. Let’s Break the Accounting Equation Down
Assets = Liabilities + Owner’s Equity
Remember how we named OE transactions as Investment, Withdrawal, Revenue and Expense
The owner gave her own cash to the business for the business to use
We increased cash
We increased Owner’s Equity, because the owner has a right to that money
We called it INVESTMENT
The owner took money out of the business to pay for something for herself– not business related
We decreased cash
We decreased Owner’s Equity, because this $ wasn’t there for her to have the right to it
We called it Withdrawal

5. Let’s Break the Accounting Equation Down
Assets = Liabilities + Owner’s Equity
Remember how we named OE transactions as Investment, Withdrawal, Revenue and Expense
A sale occurs
We increased either cash or accounts receivable
We increased Owner’s Equity, because the owner has a right to that money received or coming in
We called it REVENUE OR
We pay cash for a service (telephone bill, repairs, rent) that isn’t an asset
We decrease cash
We decrease Owner’s Equity, because the owner is losing the rights to the cash
We called it EXPENSE

6. Let’s Break the Accounting Equation Down
Assets = Liabilities + Owner’s Equity
Remember how we named OE transactions as Revenue and Expense?
Let’s practice some of these:
Decrease cash (asset),
decrease Capital (OE)
Paid cash for charity:
Expense
Sold services for cash:
Increase cash (asset)
Increase Capital (OE)
Revenue
Sold services to customer
On account:
Increase accounts receivable (asset),
Increase Capital (OE)
Revenue
Decrease cash (asset)
Decrese Capital (OE)
Expense
Paid cash for cleaning service to clean office:

7. The Expanded Accounting Equation
Assets = Liabilities + Owner’s Equity
Assets = Liabilities +
Investment – Withdrawal + Revenue - Expense
(Capital)

8. Accounting Terms
T account – Temporary account; an accounting device used to analyze transactions
Debit – an amount recorded on the left side of the T account
Credit – an amount recorded on the right side of the T account

9. T Account and Debits and Credits: The Increase-Decrease Secret
WITT

10. The Accounting Equation Debits & Credits Using T Accounts
Learning on the closet door

11. REVIEW IN PRINT
Textbook pages 28, 29, and 30

12. Increases and Decreases for the “T” Account
Two sides of an account are used to record increases and decreases to that account.
Any Asset
Debit side increases (Left side and normal balance)
Credit decreases (Right side)
Any Liability and OE
Debit side decreases (left side)
Credit side increases (right side and normal balance)

13. Account Balances Normal Balance The side of the account that increases
Assets
On the left side of the T
Have normal debit balances
Liabilities and OE
On the right side of the T
Have normal credit balances

14. Work Together Work Together WP p. 21 Textbook p. 31 USE THE STEPS!

15. Debit/Credit Dance

16. TRANSACTION ANALYSIS Step by step Which accounts are affected?
How is each account classified?
Asset, liability, or owner’s equity account
How is each classification changes?
Increase or decrease
How is each amount entered in the accounts?
Debit or credit side

17. Received cash from owner as an investment $5000
1. Which accounts are affected?
Cash and Capital
2. How is each account classified?
Cash is an asset
Capital is an OE
3. How is each classification changed?
Assets: increase
OE: Increase
4. How is each amount entered in accounts?
Assets increase on the debit side
Debit the asset account cash
OE increase on the credit side
Credit the OE account capital

18. Paid cash for supplies $275.00
1. Which accounts are affected?
Supplies and Cash
2. How is each account classified?
Supplies is an Asset
Cash is an Asset
3. How is each classification changed?
One asset (supplies): increase
One asset (cash): decrease
4. How is each amount entered in accounts?
Assets increase on the debit side
Debit the asset account supplies
Assets decrease on the credit side
Credit the asset account cash

19. Paid cash for insurance $1,200
1. Which accounts are affected?
Prepaid insurance and cash
2. How is each account classified?
Prepaid insurance is an Asset
Cash is an Asset
3. How is each classification changed?
One asset (prepaid insurance): increase
One asset (cash): decrease
4. How is each amount entered in accounts?
Assets increase on the debit side
Debit the asset account prepaid insurance
Assets decrease on the credit side
Credit the asset account cash

20. Bought supplies on account $500
1. Which accounts are affected?
Supplies and Accounts Payable (Supply Depot)
2. How is each account classified?
Supplies is an Asset
Accounts Payable is a Liability
3. How is each classification changed?
Assets: increase
Liabilities: increase
4. How is each amount entered in accounts?
Assets increase on the debit side
Debit the asset account supplies
Liabilities increase on the credit side
Credit the liability account Accounts payable

21. Paid cash on account $300 1. Which accounts are affected?
Cash and Accounts Payable (Supply Depot)
2. How is each account classified?
Cash is an Asset
Accounts Payable is a Liability
3. How is each classification changed?
Assets: decrease
Liabilities: decrease
4. How is each amount entered in accounts?
Assets decrease on the credit side
Credit the asset account cash
Liabilities decrease on the debit side
debit the liability account Accounts payable

22. Practice Work Together WP p.23 Textbook p. 27 HOMEWORK:
Study Guide 2: WP p. 17
Study Guide Part Three: WP p. 19, #’s 1 – 8
On Your Own
WP p. 24
Textbook p. 37`

23. Analyzing Trasactions: OE Accts

24. Receive cash from sales $295
1. Which accounts are affected?
Cash and Sales
2. How is each account classified?
Cash is an asset
Sales is an OE (revenue)
3. How is each classification changed?
Assets: increase
OE: Increase
4. How is each amount entered in accounts?
Assets increase on the debit side
Debit the asset account cash
OE increase on the credit side
Credit the revenue account sales

25. Sold services on account $350
1. Which accounts are affected?
Accounts receivable and Sales
2. How is each account classified?
AR is an asset
Sales is an revenue account that affects OE
3. How is each classification changed?
Assets: increase
OE: Increase
4. How is each amount entered in accounts?
Assets increase on the debit side
Debit the asset account AR
OE increase on the credit side
Credit the revenue account sales (OE)

26. Paid cash for an expense (Rent) $300
1. Which accounts are affected?
Cash and Rent Expense
2. How is each account classified?
Cash is an asset
Rent Exp is an OE
3. How is each classification changed?
Assets: decrease
OE: decreases
4. How is each amount entered in accounts?
OE decrease on the debit side
Debit the rent expense account
Assets decrease on the credit side
Credit the asset account cash

27. Received cash on account $200
1. Which accounts are affected?
Cash and Accounts receivable
2. How is each account classified?
Cash is an asset
AR is an asset
3. How is each classification changed?
Assets: (cash) increase
Assets: (AR) decreases
4. How is each amount entered in accounts?
Assets increase on the debit side
Debit the asset account cash
Assets decrease on the credit side
Credit the asset account AR

28. Paid cash to owner for personal use $125
1. Which accounts are affected?
Cash and Owner, Drawing
2. How is each account classified?
Cash is an asset
Owner Drawing is an OE
3. How is each classification changed?
Assets: decrease
OE: decreases
4. How is each amount entered in accounts?
OE decreases on the debit side
Debit the OE account Owner Drawing
Assets decrease on the credit side
Credit the asset account cash

29. REVIEW ACTIVITIES http://www.quia.com/cm/63252.html
Quia game matching transactions and vocab