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LO4 Restate and apply the four questions necessary to analyze transactions for starting a business into debit and credit parts.

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Chart of Accounts

● Each transaction changes the balances of at least two accounts.

● A list of accounts used by a business is called a chart of accounts.

SLIDE 2

Lesson 2-2

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Chart of Accounts for Delgado Web Services

SLIDE 3

Balance Sheet Accounts(100) ASSETS110 Cash120 Petty Cash130 Accounts Receivable—Main Street Services140 Accounts Receivable—Valley Landscaping150 Supplies160 Prepaid Insurance

(200) LIABILITIES210 Accounts Payable—Canyon Office Supplies220 Accounts Payable—Mountain Graphic Arts

(300) OWNER’S EQUITY310 Michael Delgado, Capital320 Michael Delgado, Drawing330 Income Summary

Income Statement Accounts(400) REVENUE410 Sales

(500) EXPENSES510 Advertising Expense520 Cash Short and Over530 Communications Expense540 Equipment Rental Expense550 Insurance Expense560 Miscellaneous Expense570 Supplies Expense

Lesson 2-2

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Received Cash from Owner as an Investment

SLIDE 4

LO4

Lesson 2-2

January 2. Received cash from owner as an investment, $2,000.00.

Cash and Michael Delgado, Capital are affected.

12 Cash is an asset account.

Owner’s Equity is increased.3

Michael Delgado,Capital is credited.

4Cash is debited.

4

Michael Delgado, Capital is an owner‘s equity account.

2

Assets are increased.3

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Paid Cash for Supplies

SLIDE 5

LO4

Lesson 2-2

January 2. Paid cash for supplies, $165.00.

Supplies and Cash are affected.12 Supplies and Cash are assets.

Assets (Cash) are decreased.3

Cash is credited.4

Assets (Supplies) are increased.3

Supplies is debited.4

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Paid Cash for Insurance

SLIDE 6

LO4

Lesson 2-2

January 3. Paid cash for insurance, $900.00.

Prepaid Insurance and Cash are affected.

12 Prepaid Insurance and Cash are assets.

Assets (Cash) are decreased.3

Cash is credited.4

Assets (Prepaid Insurance) are increased.3

Prepaid Insuranceis debited.

4

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Bought Supplies on Account

SLIDE 7

LO4

Lesson 2-2

January 5. Bought supplies on account from Canyon Office Supplies, $220.00.

Supplies and Accounts Payable—Canyon Office Supplies are affected.

12 Supplies is an asset.

Liabilities are increased.3

Accounts Payable—Canyon OfficeSupplies is credited.

4Suppliesis debited.

4

Accounts Payable—Canyon OfficeSupplies is aliability.

2

Assets are increased.3

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Paid Cash on Account

SLIDE 8

LO4

Lesson 2-2

January 9. Paid cash on account to Canyon Office Supplies, $100.00.

Accounts Payable—Canyon Office Suppliesand Cash are affected.

12 Cash is an asset.

Liabilities aredecreased.3

Accounts Payable—Canyon OfficeSupplies is debited.

4

Cash iscredited.

4

Accounts Payable—Canyon OfficeSupplies is aliability.

2

Assets aredecreased.3

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Lesson 2-2 Audit Your Understanding

1. State the four questions used to analyze a transaction.

SLIDE 9

ANSWER

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?

Lesson 2-2

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Lesson 2-2 Audit Your Understanding

2. Which two accounts are affected when a business buys supplies on account?

SLIDE 10

ANSWER

SuppliesAccounts Payable

Lesson 2-2