Chapter 2
Analyzing Transactions into
Debit and Credit Parts
Today’s Objectives
• Use T-accounts to analyze transactions
showing which accounts are debited or
credited for each transaction
• Identify which accounts have credit balances
and which accounts have debit balances
Debit
• Left Side
Credit
• Right Side
T- Account
A device used to analyze transactions
Assets
Left side
=
Liabilities + Owner’s Equity
Right side
Assets
=
Liabilities + Owner’s Equity
Left side
Right side
Debit
Credit
T Account
Left side
Right side
Debit
Credit
Normal Balance
• The side of the account that is
increased
Asset
Debit
Normal Balance
Credit
Liability
Debit
Credit
Normal Balance
Owner’s Capital Account
Debit
Credit
Normal Balance
Assets
=
Liabilities + Owner’s Equity
Asset
Debit
Liability
Credit
Debit
Normal Balance
Credit
Normal Balance
Owner’s Capital Account
Debit
Credit
Normal Balance
Review Account
Classifications
•
•
•
•
•
•
Cash
Supplies
Capital
Prepaid Insurance
Accounts Payable
Accounts Receivable
Analyze Transactions
• Received cash from owner as an
investment, $5,000.
• Paid cash for supplies, $275.
• Paid cash for insurance, $1,200.
• Bought supplies on Account from
Supply Depot, $500.
• Paid cash on account, $300.00
Analyzing How Transactions
Affect Owner’s Equity
• Sales
• Expenses
• Drawing
Sales
Debit
Credit
Normal Balance
How does Sales affect Owner’s Equity?
Expenses
Debit
Credit
Normal Balance
How does Sales affect Owner’s Equity?
Drawing
Debit
Credit
Normal Balance
How does Sales affect Owner’s Equity?
Analyze Transactions that
Affect Owner’s Equity
• Received cash from Sales, $295.00
• Sold services on account to Oakdale
School, $350.00
• Paid cash for rent, $300.00
• Received cash on account from
Oakdale School, $200.00
• Paid cash to owner for personal use,
$125.00