© south-western educational publishing n what you should know from chapter 1 –know the basic...

© South-Western© South-WesternEducational PublishingEducational Publishing

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 4)

Chapter 2-1 (Pg. 24)Chapter 2-1 (Pg. 24)



Lesson 2-1, page 26Lesson 2-1, page 26

Transaction 6 August 12. Received cash from sales, $325.00.

Transaction 7 August 12. Sold services on account to Kids Time, $200.00.


PAID CASH FOR EXPENSESPAID CASH FOR EXPENSES

Transaction 8 August 12. Paid cash for rent, $250.00.

Transaction 9 August 12. Paid cash for telephone bill, $45.00.



OTHER TRANSACTIONSOTHER TRANSACTIONS


Transaction 10 August 12. Received cash on account from Kids Time, $100.00.

Transaction 11 August 12. Paid cash to owner for personal use, $100.00.

–100 (withdrawal)


5. Add and compare the totals.

BALANCE SHEET PREPARATIONBALANCE SHEET PREPARATION

5

1

3

4

2

76

1. Write the heading.

2. Prepare the assets section.

3. Prepare the liabilities section.

4. Prepare the owner’s equity section.

6. Rule single lines.

7. Write the totals.

8. Rule double lines.

8



Transaction Change in Number Kind of Transaction Owner’s Equity

6 Revenue (cash) +325.007 Revenue (on account) +200.008 Expense (rent) –250.009 Expense (telephone) –45.00

11 Withdrawal –100.00

Net change in owner’s equity +130.00

SUMMARY OF CHANGES IN OWNER’S EQUITYSUMMARY OF CHANGES IN OWNER’S EQUITY



TTERMS REVIEWERMS REVIEWrevenue

sale on account

expense

withdrawals



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)

Chapter 2Chapter 2

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