Transactions That Affect Revenue, Expenses, and Withdrawals

1. Transactions That Affect Revenue, Expenses, and Withdrawals Chapter Five, Section 1

2. Temporary and Permanent Accounts • Temporary Accounts • Revenue, Expense, and Withdrawal • Start each period with zero balances • Permanent Accounts • Assets, Liabilities, and Owner’s Equity • Maintain balance from period to period • Ending balance, Period 1 = Beginning balance, Period 2

3. Rules of Debit and Credit • Revenue Accounts • Increase = credit side • Decrease = debit side • Normal balance = credit side • Increase Owner’s Equity

4. Rules of Debit and Credit • Expense Accounts • Increase = debit side • Decrease = credit side • Normal balance = debit side • Decrease Owner’s Equity

5. Rules of Debit and Credit • Withdrawal Accounts • Increase = debit side • Decrease = credit side • Normal balance = debit side • Decrease Owner’s Equity • AKA “drawing account”

6. Reinforce (Page 110) Assets Liabilities Owner’s Capital Revenue Owner’s Withdrawals Expenses