Debit and Credit (Using

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Debit and Credit(Using T Accounts)

• Chapter 2
• Analyzing Transactions into Debit and Credit
  Parts

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DO NOW In your notebook

• What do you know about debits and credits?

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The Accounting Equation Its really not
efficient

• http//www.youtube.com/watch?vPEXulul11dE

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Lets Break the Accounting Equation Down

• Assets Liabilities Owners 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 Owners 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 Owners
Equity, because this wasnt there for her to
have the right to it We called it Withdrawal
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Lets Break the Accounting Equation Down

• Assets Liabilities Owners 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 Owners 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 isnt an asset We decrease
cash We decrease Owners Equity, because the
owner is losing the rights to the cash We called
it EXPENSE
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Lets Break the Accounting Equation Down

• Assets Liabilities Owners Equity

Remember how we named OE transactions as Revenue
and Expense? Lets 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
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The Expanded Accounting Equation

• Assets Liabilities Owners Equity

Assets Liabilities
Investment Withdrawal Revenue - Expense
(Capital)
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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

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T Account and Debits and Credits The
Increase-Decrease Secret

• http//www.youtube.com/watch?vDfX_mbbBsYo
• WITT

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The Accounting Equation Debits Credits
Using T Accounts

• http//www.youtube.com/watch?v99LTqkxzBpA

Learning on the closet door
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REVIEW IN PRINT

• Textbook pages 28, 29, and 30

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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)

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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

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Work Together

• WP p. 21
• Textbook p. 31
• Work Together
• WP p. 22
• Textbook p. 31

• USE THE STEPS!

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Debit/Credit Dance

• http//www.youtube.com/watch?vj71Kmxv7smk

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TRANSACTION ANALYSIS

• Step by step
• Which accounts are affected?
• How is each account classified?
• Asset, liability, or owners equity account
• How is each classification changes?
• Increase or decrease
• How is each amount entered in the accounts?
• Debit or credit side

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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

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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

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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

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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

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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

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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

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Analyzing Trasactions OE Accts
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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

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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)

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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

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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

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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

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REVIEW ACTIVITIES

• http//www.quia.com/cm/63252.html
• Quia game matching transactions and vocab