Chapter 4
Debit and Credit Theory
1
Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Today’s lesson focuses on classifying various transactions using debit
and credit theory.
For more detailed instructions, refer to Section 4.2 of the Accounting 1
textbook.
Debit ?
Credit ?
2
Chapter 4 – Debit and Credit Theory | Accounting 1, 7th Edition
Debit and Credit Theory
When viewed in T-account form, all accounts have a left and a right
side.
3
Chapter 4 – Debit and Credit Theory | Accounting 1, 7th Edition
Debit and Credit Theory
The word Credit is associated with the right side.
4
Chapter 4 – Debit and Credit Theory | Accounting 1, 7th Edition
Debit and Credit Theory
Assets, Liabilities, and Owner’s Equity accounts have their own debit
and credit rules.
5
Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Remember, assets behave opposite from liabilities and owner’s equity
because they are on different sides of the balance sheet.
6
Chapter 4 – Debit and Credit Theory | Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 1: The company purchases $200 worth of supplies from
Packham Products, to be paid for later.
7
Chapter 4 – Debit and Credit Theory | Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 1: The company purchases $200 worth of supplies from
Packham Products, to be paid for later.
8
Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 2: The company pays $500 to Dini Bros. in partial
payment of the amount owed to them.
9
Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 2: The company pays $500 to Dini Bros. in partial
payment of the amount owed to them.
10 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 3: The company receives $200 cash from R. Van Loon
in partial payment of her debt.
11 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 3; The company receives $200 cash from R. Van Loon
in partial payment of her debt.
12 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 4: A delivery service is provided for a customer at
a price of $400. The customer pays cash at the time the service is
completed.
13 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 4: A delivery service is provided for a customer at
a price of $400. The customer pays cash at the time the service is
completed.
14 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 5: A used truck costing $8000 is purchased from Dini
Bros. A cash down payment of $2500 is made at the time of the
purchase and the balance is to be paid at a later date.
15 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 5: A used truck costing $8000 is purchased from Dini
Bros. A cash down payment of $2500 is made at the time of the
purchase and the balance is to be paid at a later date.
16 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 6: A delivery service is completed for R. Van Loon at a
price of $350. Van Loon does not pay for the service at the time it is
provided, but agrees to pay within 30 days.
17 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 6: A delivery service is completed for R. Van Loon at a
price of $350. Van Loon does not pay for the service at the time it is
provided, but agrees to pay within 30 days.
18 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 7: One of the lifting machines (part of Equipment)
breaks down. The company spends $650 cash to have the machine
repaired.
19 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Transaction 7: One of the lifting machines (part of Equipment)
breaks down. The company spends $650 cash to have the machine
repaired.
20 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Debit and Credit Theory
Summary of all transactions.
21 Chapter 4 – Debit and Credit Theory l Accounting 1, 7th Edition
Practice. Practice. Practice.
On page 102,
•
Review Questions (1-12)
•
Exercises (1-4)
22 Presentation Title runs here l 00/00/00