CENTURY 21 ACCOUNTING © Thomson/South-Western

1

LESSON 1-2

Lesson 1-1 THE ACCOUNTING EQUATIONLesson 1-1 THE ACCOUNTING EQUATION page 8

CENTURY 21 ACCOUNTING © Thomson/South-Western

2

LESSON 1-2

TERMS REVIEWTERMS REVIEW

accounting accounting system accounting records financial statements service business proprietorship asset

equities liability owner’s equity accounting equation ethics business ethics

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CENTURY 21 ACCOUNTING © Thomson/South-Western

LESSON 1-2LESSON 1-2

How Business Activities Change the Accounting Equation

CENTURY 21 ACCOUNTING © Thomson/South-Western

4

LESSON 1-2

RECEIVING CASHRECEIVING CASH

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

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CENTURY 21 ACCOUNTING © Thomson/South-Western

5

LESSON 1-2

PAYING CASHPAYING CASH

Transaction 2 August 3. Paid cash for supplies, $275.00.

Transaction 3 August 4. Paid cash for insurance, $1,200.00.

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CENTURY 21 ACCOUNTING © Thomson/South-Western

6

LESSON 1-2

TRANSACTIONS ON ACCOUNTTRANSACTIONS ON ACCOUNT

Transaction 4 August 7. Bought supplies on account from Supply Depot, $500.00.

Transaction 5 August 11. Paid cash on account to Supply Depot, $300.00.

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CENTURY 21 ACCOUNTING © Thomson/South-Western

7

LESSON 1-2

TERMS REVIEWTERMS REVIEW

transaction account account title account balance capital

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CENTURY 21 ACCOUNTING © Thomson/South-Western

LESSON 1-3LESSON 1-3

How Transactions Change Owner’s Equity in an Accounting Equation

CENTURY 21 ACCOUNTING © Thomson/South-Western

9

LESSON 1-2

REVENUE TRANSACTIONSREVENUE TRANSACTIONS

Transaction 6 August 12. Received cash from sales, $295.00.

Transaction 7 August 12. Sold services on account to Oakdale School, $350.00.

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CENTURY 21 ACCOUNTING © Thomson/South-Western

10

LESSON 1-2

EXPENSE TRANSACTIONSEXPENSE TRANSACTIONS

Transaction 8 August 12. Paid cash for rent, $300.00.

Transaction 9 August 12. Paid cash for telephone bill, $40.00.

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CENTURY 21 ACCOUNTING © Thomson/South-Western

11

LESSON 1-2

OTHER CASH TRANSACTIONSOTHER CASH TRANSACTIONS

Transaction 10 August 12. Received cash on account from Oakdale School, $200.00.

Transaction 11 August 12. Paid cash to owner for personal use, $125.00.

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CENTURY 21 ACCOUNTING © Thomson/South-Western

12

LESSON 1-2

TERMS REVIEWTERMS REVIEW

revenue sale on account expense withdrawals

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