Recording Business Transactions pot

Recording Business Transactions Chapter 2 Use accounting terms Objective 1 Accounting Terms Account Ledger Assets Liabilities Owner’s equity Double-entry accounting T-account Cash Cash Accounts Payable Accounts Payable Gay Gillen, Capital Gay Gillen, Capital Ledger Ledger All individual accounts combined make up the ledger. Individual asset accounts Individual liability accounts Individual owner’s equity accounts Accounting Terms Classification of Accounts  What are some asset accounts? – Cash – Notes Receivable – Accounts Receivable – Prepaid Expenses – Land – Building – Equipment Classification of Accounts  What are some liability accounts? – Notes Payable – Accounts Payable – Accrued Liabilities (for expenses incurred but not paid) – Long-term Liabilities (bonds) Classification of Accounts  What are some owner’s equity accounts? – Capital or owner’s interest in the business – Withdrawals – Revenues – Expenses John’s Gas Station Example  Assume that the business sold $5,000 worth of gasoline on a given day and performed $3,000 of repair services.  How much revenue did the business earn that day?  $8,000 John’s Gas Station Example  Revenues increase John’s equity in the business.  The business had to pay mechanics and vendors $3,750 for the work performed that day. John’s Gas Station Example  Expenses decrease John’s equity in the business.  How much was the net increase in John’s equity that day?  $4,250 [...]... Liabilities Notes payable $300,000 Owner’s Equity John, capital 500,000 Total liabilities and owner’s equity $800,000 Objective 3 Record Transactions in the Journal Journals 1 2 3 4 What is a journal? It is a list in chronological order of all the transactions for a business Identify transaction from source documents Specify accounts affected Apply debit/credit rules Record transaction with description... a journal entry include? date of the transaction title of the account debited title of the account credited amount of the debit and credit description of the transaction dollar signs are omitted Recording Transactions On April 2, Gay Gillen invested $30,000 in Gay Gillen eTravel What is the journal entry? April 2 Cash 30,000 Gay Gillen, Capital 30,000 Received initial investment from owner Objective... a corporation, the owner’s equity account is called Stockholders’ Equity Contributed Capital Retained Earnings Double-Entry Accounting Double entry bookkeeping means to record the dual effects of each business transaction Assets = Liabilities + Owner’s Equity Assets are on the left (debit) side Liabilities and Equity are on the right (credit) side The T-Account Account Title Debit Left Side Credit . Recording Business Transactions Chapter 2 Use accounting terms Objective 1 Accounting Terms Account . services.  How much revenue did the business earn that day?  $8,000 John’s Gas Station Example  Revenues increase John’s equity in the business.  The business had to pay mechanics and vendors. equity accounts? – Capital or owner’s interest in the business – Withdrawals – Revenues – Expenses John’s Gas Station Example  Assume that the business sold $5,000 worth of gasoline on a given