Accounting for a Service
Business
Unit 1.3
Transactions
What is a Transaction?
An event that occurs during the operation
of a business and results in a financial
change
A business transaction always includes an
exchange of value
Something of
value is
given
Transaction
Something of
value is
received
Transaction Analysis
Using the totals from a Balance Sheet,
transactions can be examined and their
effects will be immediately reflected on the
net worth of a business
Transactions usually take place between
accounting periods
The period of time covered by an accounting
statement
Questions to ask regarding a
transaction…
Which items change in value as a result of
the transaction?
At least two accounts must be affected in order
for a transaction to be valid
How much do these items change?
Do the items increase or decrease in
value?
After the change is recorded, does the
balance sheet equation still balance?
Transaction Analysis Template
Found on the Share Drive
Print out a copy to fill in the numbers
manually or input the numbers directly on
the computer
Use the latest Balance Sheet to create the
Opening Balance
Goldman Gym – Transaction Analysis
Transaction 1
Purchased new training equipment for $500
cash
Training Equipment will increase by $500
Cash will decrease by $500
Cash now has a balance of $4,500
Equipment now has a balance of $95,000
Assets still equal Liabilities plus Equity
Goldman Gym – Transaction Analysis
Transaction 2
Purchased office supplies for $55, on credit,
from Central Supply Co.
Office Supplies increase by $55
Money owed (Accounts Payable) increases by $55
Office Supplies now has a balance of $555
Accounts Payable now has a balance of $4,055
Assets still equal Liabilities plus Equity
Goldman Gym – Transaction Analysis
Transaction 3
Received $3,000 from customers who owed
money to the business
Cash balance increases by $3,000
Accounts Receivable (money owed from customers)
decreases by $3,000
New Cash balance is $7,500
New Accounts Receivable balance is $3,000
Assets still equal Liabilities plus Equity
Goldman Gym – Transaction Analysis
Complete the remaining transactions
(page 18) yourself
As a hint…Total Assets = $242,480 at the
end of the exercise
Preparing a New Balance Sheet
Transfer the new balances from the
transaction analysis sheet to a new
balance sheet
Make sure the date reflects the changes in
the account balances