Presentation on theme: "TRANSACTIONS THAT AFFECT ASSETS, LIABILITIES AND OWNER’S CAPITAL Chapter 4."— Presentation transcript:
TRANSACTIONS THAT AFFECT ASSETS, LIABILITIES AND OWNER’S CAPITAL Chapter 4
Accounts and the Double Entry System Chart of Accounts – List of all accounts used by a business See pg 79 Ledger – A Book or System where all accounts are grouped together General Ledger Double Entry Accounting – A system of analyzing transactions that uses Debits and Credits
Accounts and the Double Entry System Debits – The left side of an account Credits – The right side of an account T Account – A tool for using double-entry accounting Normal Balance – The side of an account used to record increases in that account.
Rules of Debit and Credit for Assets Asset Accounts Increased on the debit side (left side) Decreased on the credit side (right side) The Normal Balance for Assets is the Debit side Debit + Increase Side Normal Balance Credit - Decrease Side Assets
Rules for Liabilities and Owner’s Equity Liabilities and Owner’s Equity Accounts Increased on the Credit (Right) side Decreased on the Debit (Left) side Normal Balance on the Credit side Debit - Decrease Side Credit + Increase Side Normal Balance Liabilities / Owner’s Equity