CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Chapter 2Objectives:• Define accounting terms related to analyzing transactions

into debit and credit parts• Identify accounting practices related to analyzing

transactions into debit and credit parts• Use T accounts to analyze transactions showing which

accounts are debited or credited for each transaction• Analyze how transactions to set up a business affect

accounts• Analyze how transactions affect owner’s equity accounts

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 2-1: Using T Accounts

Terms Review T account—an accounting device used to

analyze transactions Debit—an amount recorded on the left side of

a T account Credit—an amount recorded on the right side

of a T account Normal balance—the side of the account

that is increased

LESSON 2-1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

3

LESSON 2-1

ANALYZING THE ACCOUNTING EQUATION page 28

The total of all assets on the left side of the accounting equation must always equal the total of all liabilities and owner’s equity on the right side.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

4

LESSON 2-1

ACCOUNTS page 29

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

5

LESSON 2-1

ACCOUNT BALANCES page 29

The normal balance is the side of the account that is increased.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

6

LESSON 2-1

INCREASES AND DECREASES IN ACCOUNTS page 30

Account balances increase on the normal balance side of an account.

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 2-1: Using T Accounts

Work Together 2-1 on page 31

On Your Own 2-1 on page 31

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 2-2: Analyzing How Transactions Affect Accounts

Term Review:

Chart of Accounts—a list of accounts used by a business

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

9

LESSON 2-2

RECEIVED CASH FROM OWNER AS AN INVESTMENT

2. How is each account classified?

3. How is each classification changed?

4. How is each amount entered in the accounts?

August 1. Received cash from owner as an investment, $5,000.00.

1 12 2

3 3

4 4

page 32

1. Which accounts are affected?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

10

LESSON 2-2

PAID CASH FOR SUPPLIES

2. How is each account classified?

3. How is each classification changed?

4. How is each amount entered in the accounts?

August 3. Paid cash for supplies, $275.00.

1 12

3 3

4 4

page 33

1. Which accounts are affected?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

11

LESSON 2-2

1. Which accounts are affected?

PAID CASH FOR INSURANCE

2. How is each account classified?

3. How is each classification changed?

4. How is each amount entered in the accounts?

August 4. Paid cash for insurance, $1,200.00.

1 12

3 3

4 4

page 34

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

12

LESSON 2-2

BOUGHT SUPPLIES ON ACCOUNT page 35

August 7. Bought supplies on account from Supply Depot, $500.00.

1. Which accounts are affected?

2. How is each account classified?

3. How is each classification changed?

4. How is each amount entered in the accounts?

1 1

3 3

4 4

2 2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

13

LESSON 2-2

PAID CASH ON ACCOUNT page 36

August 11. Paid cash on account to Supply Depot, $300.00.

1. Which accounts are affected?

2. How is each account classified?

3. How is each classification changed?

4. How is each amount entered in the accounts?

1 1

3 3

4 4

2 2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 2-2: Analyzing How Transactions Affect Accounts

Work Together 2-2 on page 37

On Your Own 2-2 on page 37

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 2-3

Analyzing How Transactions Affect Owner’s Equity Accounts

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

16

LESSON 2-3

RECEIVED CASH FROM SALES page 38

August 12. Received cash from sales, $295.00.

1. Which accounts are affected?

2. How is each account classified?

3. How is each classification changed?

4. How is each amount entered in the accounts?

1 1

3 3

4 4

2 2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

17

LESSON 2-3

SOLD SERVICES ON ACCOUNT page 39

August 12. Sold services on account to Oakdale School, $350.00.

1. Which accounts are affected?

2. How is each account classified?

3. How is each classification changed?

4. How is each amount entered in the accounts?

1 1

3 3

4 4

2 2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

18

LESSON 2-3

PAID CASH FOR AN EXPENSE page 40

August 12. Paid cash for rent, $300.00.

1. Which accounts are affected?

2. How is each account classified?

3. How is each classification changed?

4. How is each amount entered in the accounts?

1

1

4

4

2 2

3

3

3

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

19

LESSON 2-3

RECEIVED CASH ON ACCOUNT page 41

August 18. Received cash on account from Oakdale School, $200.00.

1. Which accounts are affected?

2. How is each account classified?

3. How is each classification changed?

4. How is each amount entered in the accounts?

1 1

3 3

4 4

2

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

20

LESSON 2-3

PAID CASH TO OWNER FOR PERSONAL USE page 42

August 18. Paid cash to owner for personal use, $125.00.

1. Which accounts are affected?

2. How is each account classified?

3. How is each classification changed?

4. How is each amount entered in the accounts?

4

4

2

2

3

3

3

1

1

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Lesson 2-3: Analyzing How Transactions Affect Owner’s Equity Accounts

21

LESSON 2-1

Work Together 2-3 on page 44

On Your Own 2-3 on page 44