Proprietorship: Changes that Effect Owner’s Equity

1. Proprietorship: Changes that Effect Owner’s Equity The changes that typically effect the day to day activities within a business.

2. Vocabulary • Revenue • Sale on Account • Expense • Withdrawals

3. Revenue Transactions Received Cash from Sales Transactions for the sale of Goods and Services results in an increase in owner’s equity. Sold Services on Account The customer is allowed to pay the business by a later specified date. Activity 2-1

4. Paid Cash for Expenses A transaction to pay for Goods or Services needed to operate the business results as a decrease in Owner’s Equity. Activity 2-1

5. Other Transactions Received Cash on Account This transaction increases Cash, and decreases Accounts Receivable Paid Cash to Owner for Personal Use This transaction typically decreases Owner’s Equity, and decreases Cash Summary of Changes in Owner’s Equity By adding each transaction effecting Owner’s Equity, the owner can see the total affect they had on the Owner’s Equity, positively or negatively. Activity 2-1