Chapter 2-1 (Pg. 24)
 What you should KNOW from Chapter 1
– Know the basic accounting terms and accounting
concepts related to starting a service business as a
proprietorship (See Chapter 1 Excel File)
– Classify accounts as assets, liabilities, or owner’s
equity and demonstrate the Accounting Equation.
Assets = Liabilities + Owners Equity
– Analyze how accounts are affected by transactions
and how this affects the Accounting Equation. (See
Pages 9-11)
– Prepare a Balance Sheet for a service business
from information in an Accounting Equation (See
Page 14)
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Chapter 2-1 (Pg. 24)
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Chapter 2-1 (Pg. 26)
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Chapter 2-1 (Pg. 24)
Transaction 6 August 12. Received cash from sales,
$325.00.
Transaction 7 August 12. Sold services on
account to Kids Time, $200.00.
Lesson 2-1, page 26
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Chapter 2-1 (Pg. 27)
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PAID CASH FOR EXPENSES
Transaction 8 August 12. Paid cash for rent, $250.00.
Transaction 9 August 12. Paid cash for telephone
bill, $45.00.
Lesson 2-1, page 27
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Chapter 2-1 (Pg. 28)
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OTHER TRANSACTIONS
Transaction 10 August 12. Received cash on account
from Kids Time, $100.00.
–100 (withdrawal)
Transaction 11 August 12. Paid cash to owner for
personal use, $100.00.
Lesson 2-1, page 28
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Chapter 2-1 (Pg. 29)
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Chapter 2-2 (Pg. 30)
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BALANCE SHEET PREPARATION
1. Write the heading.
2. Prepare the assets
section.
3. Prepare the liabilities
section.
4. Prepare the owner’s
equity section.
5. Add and compare the
totals.
6. Rule single lines.
7. Write the totals.
8. Rule double lines.
1
2
3
4
5
6
7
8
Lesson 2-2, page 30
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Chapter 2-2 (Pg. 31)
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Chapter 2-2 (Pg. 32)
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SUMMARY OF CHANGES IN OWNER’S EQUITY
Transaction
Number
Change in
Owner’s Equity
Kind of Transaction
6
7
8
9
11
Revenue (cash)
Revenue (on account)
Expense (rent)
Expense (telephone)
Withdrawal
+325.00
+200.00
–250.00
–45.00
–100.00
Net change in owner’s equity
+130.00
Lesson 2-1, page 28
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TERMS REVIEW
revenue
sale on account
expense
withdrawals
Lesson 2-1, page 29
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Chapter 2
 What you should KNOW from Chapter 2
– Know the basic accounting terms and accounting
concepts that affect Owners Equity Transactions.
(See Chapter 2 Excel File)
– Analyze changes in an accounting equation that
affect Owners Equity transactions in a service
business organized as a proprietorship. See 2-1
Transactions!!!
– Prepare a Balance Sheet for a service business
from information in an Accounting Equation (See
Page 30)
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