Assets = Liabilities + Owners Equity
T- Account
Each account receives a T-Account so that we may analyze the balance of the account
Analyzing the T-Account
Left Side Right Side
Debit Credit
Each account will have its own T-accountCash,Supplies,Pre-paid Insurance
Assets = Liabilities + Owners Equity
Left Side Right SideDebit Credit
Normal Bal...
CashSuppliesPrepaid Insurance
+ -
Left Side Right Side
Debit Credit
Normal Bal...
- +
All companies have a sheet of paper that tell you what all of their accounts are it is called
– Chart of Accounts Assets
• Cash
• Supplies
• Prepaid Insurance
• Accounts Receivable
Liabilities• Accounts Payable
Owners Equity• Barbara Trevino, Capital
4 questions you need to ask….
What two accounts does it effect?What types of accounts are they?How is each account balanced changed?How is each amount entered into the T-
Accounts?
1. Received cash from owner as an investment $10,000
What two accounts does it effect?
Cash Barbara Trevino, Capital
What types of accounts are they? Asset
How is each account balanced changed?
Cash Increased Barbara Trevino, Capital
increase
How is each amount entered into the T- Accounts
Owners Equity
4 questions you need to ask….
What two accounts does it effect?What types of accounts are they?How is each account balanced changed?How is each amount entered into the T-
Accounts?
How is each amount entered into the T- Accounts
Cash Barbara Trevino, Capital
Debit Credit Debit Credit
Normal Bal... Normal Bal...
+ - - +
Received Cash from Owner10,000
10,000 10,000
So we say for this transaction we Debit Cash, Credit Capital
Two major rules we must remember……... Accounting Equation - Do our assets = our
liabilities + our owners Equity???? Do our debits = our credits???
1. Paid cash for supplies $1,577
What two accounts does it effect?
Cash Supplies
What types of accounts are they? Asset
How is each account balanced changed?
Cash Decreases Supplies increase
How is each amount entered into the T- Accounts
How is each amount entered into the T- Accounts
Cash SuppliesDebit Credit Debit Credit
Normal Bal... Normal Bal....
+ - + -
Paid Cash for supplies 1,577
1,577 1,577
So we say for this transaction we Credit cash, Debit Supplies
1. Paid cash for Insurance
What two accounts does it effect?
Cash Prepaid Insurance
What types of accounts are they? Asset
How is each account balanced changed?
Cash DecreasesPrepaid Insurance
increase
How is each amount entered into the T- Accounts
How is each amount entered into the T- Accounts
Cash Prepaid InsuranceDebit Credit Debit Credit
Normal Bal.. Normal Bal..
+ - + -
Paid Cash for Insurance
1200 1200
So we say for this transaction we Credit cash, Debit PPI
Bought supplies on account from Butler Cleaning Supplies2,720
What two accounts does it effect?
Supplies Butler Cleaning Supplies
What types of accounts are they? AssetLiability
How is each account balanced changed?
Supplies IncreaseButler Cleaning Supplies
increase
How is each amount entered into the T- Accounts
How is each amount entered into the T- Accounts
Supplies Butler Cleaning SuppliesDebit Credit Debit Credit
Normal Bal.. Normal Bal..
+ - - +
Bought supplies on account
2,270 2,270
So we say for this transaction we Debit supplies, Credit Butler Cleaning Sup
Paid cash on account to Butler Cleaning Supplies 1,360
What two accounts does it effect?
Cash Butler Cleaning Supplies
What types of accounts are they? AssetLiability
How is each account balanced changed?
Cash Decreases Butler Cleaning Supplydecreases
How is each amount entered into the T- Accounts
How is each amount entered into the T- Accounts
Cash Butler Cleaning SupplyDebit Credit Debit Credit
Normal Bal.. Normal Bal..
+ - - +
Paid Cash on Account
1360 1360
So we say for this transaction we Credit cash, Debit Butler cleaning supplies
Assets = Liabilities + Owners Equity
Left Side Right SideDebit Credit
Normal Bal..
CashSuppliesPrepaid Insurance
+ -
Left Side Right Side
Debit Credit Normal Bal..
- +
Owners Equity
Left Side Right Side
Debit Credit Normal Bal..
- +
Revenue
Left Side Right Side
Debit Credit Normal Bal..
+ -
Expense
Received Cash from Sales $525
What two accounts does it effect?
Cash Sales
What types of accounts are they? AssetRevenue
How is each account balanced changed?
Cash Increases Sales Increase
How is each amount entered into the T- Accounts
How is each amount entered into the T- Accounts
Cash SalesDebit Credit Debit Credit
Normal Bal.. Normal Bal..
+ - - +
Received Cash from Sales
525 525
So we say for this transaction we Debit Cash, Credit Sales
Paid Cash for Rent 250
What two accounts does it effect?
Cash Rent Expense
What types of accounts are they? AssetExpense
How is each account balanced changed?
Cash Decreases Rent Expense
Increase
How is each amount entered into the T- Accounts
How is each amount entered into the T- Accounts
Cash Rent ExpenseDebit Credit Debit Credit
Normal Bal.. Normal Bal..
+ - + -
Paid cash for rent $250
250 250
So we say for this transaction we Credit Cash, Debit Rent Exp.
Paid cash to owner for personal use $100
What two accounts does it effect?
Cash Ben Furman, Drawing
What types of accounts are they? AssetDrawing
How is each account balanced changed?
Cash DecreaseBen Furman, Drawing
Increase
How is each amount entered into the T- Accounts
How is each amount entered into the T- Accounts
Cash Ben Furman, DrawingDebit Credit Debit Credit
Normal Bal Normal Bal
+ - + -
Paid cash to owner for personal Use $100
100 100
So we say for this transaction we Credit Cash, Debit Drawing