© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
THE ACCOUNTING EQUATIONTHE ACCOUNTING EQUATION
Lesson 1-1, page 7Lesson 1-1, page 7
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
TTERMS REVIEWERMS REVIEWaccounting
accounting system
accounting records
service business
proprietorship
Lesson 1-1, page 8Lesson 1-1, page 8
asset
equities
liability
owner’s equity
accounting equation
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
RECEIVING CASHRECEIVING CASH
Lesson 1-2, page 9Lesson 1-2, page 9
Transaction 1 August 1. Received cash from owner an an investment, $10,000.00.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
PAYING CASHPAYING CASH
Lesson 1-2, page 10Lesson 1-2, page 10
Transaction 2 August 3. Paid cash for supplies, $1,577.00.
Transaction 3 August 4. Paid cash for insurance, $1,200.00.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
TRANSACTIONS ON ACCOUNTTRANSACTIONS ON ACCOUNT
Lesson 1-2, page 11Lesson 1-2, page 11
Transaction 4 August 7. Bought supplies on account from Ling Music Supplies, $2,720.00.
Transaction 5 August 11. Paid cash on account to Ling Music Supplies, $1,360.00.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
TTERMS REVIEWERMS REVIEWtransaction
account
account title
account balance
capital
Lesson 1-2, page 12Lesson 1-2, page 12
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
RECEIVED CASH FROM SALESRECEIVED CASH FROM SALES
Lesson 3-3, page 51Lesson 3-3, page 51
August 12. Received cash from sales, $325.00.
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3
4
22
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4
1
1. Cash and Sales are affected.
4. Cash is debited. Sales is credited.
3. Assets are increased. Owner’s equity is increased.
2. Cash is an asset. Sales is a revenue account that affects owner’s equity.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
SOLD SERVICES ON ACCOUNTSOLD SERVICES ON ACCOUNT
Lesson 3-3, page 52Lesson 3-3, page 52
August 12. Sold services on account to Kids Time, $200.00.
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4
22
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4
1
1. Accounts Receivable—Kids Time and Sales are affected.
4. Accounts Receivable—Kids Time is debited. Sales is credited.
3. Assets are increased. Owner’s equity is increased.
2. Accounts Receivable—Kids Time is an asset. Sales is a revenue account that affects owner’s equity.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
2. Cash is an asset. Rent Expense is an expense account that affects owner’s equity.
3. Assets are decreased. Owner’s equity is decreased; expenses are increased.
PAID CASH FOR AN EXPENSEPAID CASH FOR AN EXPENSE
Lesson 3-3, page 53Lesson 3-3, page 53
August 12. Paid cash for rent, $250.00.
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3
4
2
3
4
1
1. Rent Expense and Cash are affected.
4. Rent Expense is debited. Cash is credited.
2
3
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
1. Cash and Accounts Receivable—Kids Time are affected.
4. Cash is debited. Accounts Receivable—Kids Time is credited.
3. Assets (Cash) are increased. Assets (Accounts Receivable—Kids Time) is decreased.
2. Cash and Accounts Receivable—Kids Time are assets.
RECEIVED CASH ON ACCOUNTRECEIVED CASH ON ACCOUNT
Lesson 3-3, page 54Lesson 3-3, page 54
August 12. Received cash on account from Kids Time, $100.00.
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3
4
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4
1
3
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
5. Add amounts and compare the totals.
PREPARING A BALANCE SHEETPREPARING A BALANCE SHEET
Lesson 1-3, page 14Lesson 1-3, page 14
5
1
3
4
2
76
1. Write the heading.
2. Prepare the assets section.
3. Prepare the liabilities section.
4. Prepare the owner’s equity section.
6. Rule single lines.
7. Write the totals.
8. Rule double lines.
8
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
TTERMS REVIEWERMS REVIEWbalance sheet
Lesson 1-3, page 15Lesson 1-3, page 15
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
REVENUE TRANSACTIONSREVENUE TRANSACTIONS
Lesson 2-1, page 26Lesson 2-1, page 26
Transaction 6 August 12. Received cash from sales, $325.00.
Transaction 7 August 12. Sold services on account to Kids Time, $200.00.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
PAID CASH FOR EXPENSESPAID CASH FOR EXPENSES
Transaction 8 August 12. Paid cash for rent, $250.00.
Transaction 9 August 12. Paid cash for telephone bill, $45.00.
Lesson 2-1, page 27Lesson 2-1, page 27
–45 (expense)
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
OTHER TRANSACTIONSOTHER TRANSACTIONS
Lesson 2-1, page 28Lesson 2-1, page 28
Transaction 10 August 12. Received cash on account from Kids Time, $100.00.
Transaction 11 August 12. Paid cash to owner for personal use, $100.00.
–100 (withdrawal)
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
Transaction Change in Number Kind of Transaction Owner’s Equity
6 Revenue (cash) +325.007 Revenue (on account) +200.008 Expense (rent) –250.009 Expense (telephone) –45.00
11 Withdrawal –100.00
Net change in owner’s equity +130.00
SUMMARY OF CHANGES IN OWNER’S EQUITYSUMMARY OF CHANGES IN OWNER’S EQUITY
Lesson 2-1, page 28Lesson 2-1, page 28
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
TTERMS REVIEWERMS REVIEWrevenue
sale on account
expense
withdrawals
Lesson 2-1, page 29Lesson 2-1, page 29
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
5. Add and compare the totals.
BALANCE SHEET PREPARATIONBALANCE SHEET PREPARATION
5
1
3
4
2
76
1. Write the heading.
2. Prepare the assets section.
3. Prepare the liabilities section.
4. Prepare the owner’s equity section.
6. Rule single lines.
7. Write the totals.
8. Rule double lines.
8
Lesson 2-2, page 30Lesson 2-2, page 30
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
ACCOUNTSACCOUNTS
Lesson 3-1, page 42Lesson 3-1, page 42
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
ACCOUNT BALANCESACCOUNT BALANCES
Lesson 3-1, page 42Lesson 3-1, page 42
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
INCREASES AND DECREASES IN ACCOUNTSINCREASES AND DECREASES IN ACCOUNTS
Lesson 3-1, page 43Lesson 3-1, page 43
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
TTERMS REVIEWERMS REVIEWT account
debit
credit
normal balance
Lesson 3-1, page 44Lesson 3-1, page 44
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
A FIVE-COLUMN JOURNALA FIVE-COLUMN JOURNAL
Lesson 4-1, page 66Lesson 4-1, page 66
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
CHECKSCHECKS
Lesson 4-1, page 67Lesson 4-1, page 67
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
RECEIVED CASH FROM OWNER AS AN INVESTMENTRECEIVED CASH FROM OWNER AS AN INVESTMENT
Lesson 3-2, page 45Lesson 3-2, page 45
August 1. Received cash from owner an an investment, $10,000.00.
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3
4
22
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4
1
1. Cash and Barbara Treviño, Capital are affected.
4. Cash is debited. Barbara Treviño, Capital is credited.
3. Assets are increased. Owner’s Equity is increased.
2. Cash is an asset account. Barbara Treviño, Capital is an owner’s equity account.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
3. Assets (Supplies) are increased. Assets (Cash) are decreased.
PAID CASH FOR SUPPLIESPAID CASH FOR SUPPLIES
Lesson 3-2, page 46Lesson 3-2, page 46
August 3. Paid cash for supplies, $1,577.00.
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3
4
2
3
4
1
1. Supplies and Cash are affected.
4. Supplies is debited. Cash is credited.
2. Supplies and Cash are assets.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
3. Assets (Prepaid Insurance) are increased. Assets (Cash) are decreased.
PAID CASH FOR INSURANCEPAID CASH FOR INSURANCE
Lesson 3-2, page 47Lesson 3-2, page 47
August 4. Paid cash for insurance, $1,200.00.
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3
4
2
3
4
1
1. Prepaid Insurance and Cash are affected.
4. Prepaid Insurance is debited. Cash is credited.
2. Prepaid Insurance and Cash are assets.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
BOUGHT SUPPLIES ON ACCOUNTBOUGHT SUPPLIES ON ACCOUNT
Lesson 3-2, page 48Lesson 3-2, page 48
August 7. Bought supplies on account from Ling Music Supplies, $2,720.00.
1
3
4
22
3
4
1
1. Supplies and Accounts Payable—Ling Music Supplies are affected.
4. Supplies is debited. Accounts Payable—Ling Music Supplies is credited.
3. Assets are increased. Liabilities are increased.
2. Supplies is an asset. Accounts Payable—Ling Music Supplies is a liability.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
PAID CASH ON ACCOUNTPAID CASH ON ACCOUNT
Lesson 3-2, page 49Lesson 3-2, page 49
August 11. Paid cash on account to Ling Music Supplies, $1,360.00.
1
3
4
22
3
4
1
1. Accounts Payable—Ling Music Supplies and Cash are affected.
4. Accounts Payable—Ling Music Supplies is debited. Cash is credited.
3. Assets are decreased. Liabilities are decreased.
2. Cash is an asset. Accounts Payable—Ling Music Supplies is a liability.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
TTERMS REVIEWERMS REVIEWchart of accounts
Lesson 3-2, page 50Lesson 3-2, page 50
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
SALES INVOICESSALES INVOICES
Lesson 4-1, page 67Lesson 4-1, page 67
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
OTHER SOURCE DOCUMENTSOTHER SOURCE DOCUMENTS
Lesson 4-1, page 68Lesson 4-1, page 68
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
RECEIVED CASH FROM OWNER AS AN INVESTMENTRECEIVED CASH FROM OWNER AS AN INVESTMENT
Lesson 4-1, page 69Lesson 4-1, page 69
August 1. Received cash from owner as an investment, $10,000.00. Receipt No. 1.
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
RECEIVED CASH FROM OWNER AS AN INVESTMENTRECEIVED CASH FROM OWNER AS AN INVESTMENT
Lesson 4-1, page 69Lesson 4-1, page 69
August 1. Received cash from owner as an investment, $10,000.00. Receipt No. 1.
1. Which accounts are affected?
Cash
Barbara Treviño, Capital
4. How is each amount entered in the accounts?
Assets increase on the debit side.
Owner’s equity accounts increase on the credit side.
3. How is each classification changed?
Assets are increased.
Owner’s equity is increased.
2. How is each account classified?
Cash is an asset account.
Barbara Treviño, Capital is an owner’s equity account.Barbara Treviño, Capital
Cash
DebitNormal Balance
CreditNormal Balance
10,000.00
10,000.00
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
RECEIVED CASH FROM OWNER AS AN INVESTMENTRECEIVED CASH FROM OWNER AS AN INVESTMENT
Lesson 4-1, page 69Lesson 4-1, page 69
August 1. Received cash from owner as an investment, $10,000.00. Receipt No. 1.
1. Write the date.
1 24
4. Write the source document number.
2. Debit Cash.
3. Credit Barbara Treviño, Capital.
3
3
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
3. Credit Cash.
PAID CASH FOR SUPPLIESPAID CASH FOR SUPPLIES
Lesson 4-1, page 70Lesson 4-1, page 70
1. Write the date.
4. Write the source document number.
2. Debit Supplies.
2 2 341
© 2000 South-Western© 2000 South-WesternEducational PublishingEducational Publishing
TTERMS REVIEWERMS REVIEWjournal
journalizing
special amount column
general amount column
entry
double-entry accounting
Lesson 4-1, page 71Lesson 4-1, page 71
source document
check
invoice
sales invoice
receipt
memorandum