# Accounting Chapter 2: Analyzing and Recording Transactions

 source documents -identify and describe transactions and events entering the accounting system -Ex. sales receipt, checks, purchase orders, bills account -record of increases and decreases in a specific asset, liability, equity, revenue or expense general ledger -is a record of all accounts used by a company assets accounts -resources owned or controlled by a company-have expected future benefits-Ex. cash, accounts receivable, note receivable, and prepaid accounts, supplies, equipment, buildings, land liability accounts -claims (by creditors) against assets, which means they are obligations to transfer assets or provide products or services to other entities.-Ex. accounts payable, notes payable, unearned revenue equity accounts -The owner’s claim on a company’s assets is called equity or owner’s equity.  Equity is the owner’s residual interest in the assets of a business after deducting liabilities.-Ex. owner's capital, owner's withdrawals, revenue, expenses Equity equation =Owner's capital - Owner's withdrawals + Revenues - Expenses When an owner invests in a company, it increases both ____ assets and equity When an owner withdraws assets for personal use, it decreases both ____ company assets and total equity Revenues always _____equity increase Expenses always ______equity decrease T-account -a ledger account-used to show the effects of transactions  Double Entry Accounting Equation To increase assets (debit or credit)? debit To decrease assets (debit or credit)? credit To increase liabilities (debit or credit)? credit To decrease liabilities (debit or credit)? debit To decrease equity (debit or credit)? debit To increase equity (debit or credit)? credit Normal balance for Assests Debit Normal balance for Liabilities Credit Normal balance for Equity Credit Normal balance for Owner, Capital Credit Normal balance for Owner, Withdrawals Debit Normal balance for Revenues Credit Normal balance for Expenses Debit Debt Ratio Formula =Total Liabilities/Total Assets Authordante01 ID348943 Card SetAccounting Chapter 2: Analyzing and Recording Transactions Descriptionstudy Updated2019-11-01T03:41:17Z Show Answers