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Understanding the Accounting Equation: A Practical Guide for Business Owners

Dive into the accounting equation and learn how business activities impact financial statements, equities, and owner's equity. Explore transactions, ethics, and terms review within accounting systems.

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Understanding the Accounting Equation: A Practical Guide for Business Owners

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  1. LESSON 1-1 The Accounting Equation

  2. THE ACCOUNTING EQUATION page 8 LESSON 1-1

  3. accounting accounting system accounting records financial statements service business proprietorship asset equities liability owner’s equity accounting equation ethics business ethics TERMS REVIEW page 9 LESSON 1-1

  4. LESSON 1-2 How Business Activities Change the Accounting Equation

  5. Transaction 1August 1. Received cash from owner as an investment, $5,000.00. RECEIVING CASH page 10 LESSON 1-2

  6. Transaction 2August 3. Paid cash for supplies, $275.00. PAYING CASH page 11 Transaction 3August 4. Paid cash for insurance, $1,200.00. LESSON 1-2

  7. Transaction 4 August 7. Bought supplies on account from Supply Depot, $500.00. TRANSACTIONS ON ACCOUNT page 12 Transaction 5 August 11. Paid cash on account to Supply Depot, $300.00. LESSON 1-2

  8. TERMS REVIEW page 13 • transaction • account • account title • account balance • capital LESSON 1-2

  9. LESSON 1-3 How Transactions Change Owner’s Equity in an Accounting Equation

  10. Transaction 6 August 12. Received cash from sales, $295.00. REVENUE TRANSACTIONS page 14 Transaction 7 August 12. Sold services on account to Oakdale School, $350.00. LESSON 1-3

  11. Transaction 8 August 12. Paid cash for rent, $300.00. EXPENSE TRANSACTIONS page 15 Transaction 9 August 12. Paid cash for telephone bill, $40.00. LESSON 1-3

  12. Transaction 10 August 18. Received cash on account from Oakdale School, $200.00. OTHER CASH TRANSACTIONS page 16 Transaction 11 August 18. Paid cash to owner for personal use, $125.00. LESSON 1-3

  13. TERMS REVIEW page 17 • revenue • sale on account • expense • withdrawals LESSON 1-3

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