Scribd
Upload
51 views10 pages

Accounting Equation, Transaction Analysis and Preparation of Financial Statement

The document discusses accounting concepts including the accounting equation, components of the equation, and how transactions affect the equation. It provides examples of 10 transactions for a computer programming business called Softbyte. The transactions include investing cash in the business, purchasing assets, receiving cash from customers, paying expenses, and withdrawing cash. The document instructs the reader to prepare a tabular summary or accounting schedule showing the impact of the transactions on the accounting equation, as well as an income statement, statement of owner's equity, and balance sheet as of September 30, 2010.

Uploaded by

শুভ Mitra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
51 views10 pages

Accounting Equation, Transaction Analysis and Preparation of Financial Statement

The document discusses accounting concepts including the accounting equation, components of the equation, and how transactions affect the equation. It provides examples of 10 transactions for a computer programming business called Softbyte. The transactions include investing cash in the business, purchasing assets, receiving cash from customers, paying expenses, and withdrawing cash. The document instructs the reader to prepare a tabular summary or accounting schedule showing the impact of the transactions on the accounting equation, as well as an income statement, statement of owner's equity, and balance sheet as of September 30, 2010.

Uploaded by

শুভ Mitra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 10

Chapter 2

Accounting Equation,
Transaction Analysis and
Preparation of Financial
Statement
Weygandt Kimmel Keiso
9th Edition)

Basic Accounting Equation


Asset = Liabilities + Owners Equity
A
= L
+ OE

Components of Accounting
Equation
1) Asset:
Resources owned by a business.
Used in carrying out activities such as
production.
Capacity to provide future benefit.

2) Liabilities :
Claims against asset.
Existing debt and obligation.
3) Owners Equity:
Owner claims against asset.
Equals to total asset minus total liability.

Increase and Decrease of Owners


Equity

Owners Equity

Investment by owner
Revenues

Withdrawal by owner
Expenses

Transaction
Transaction:
Economic events that are recorded are 2
types:
a) internal
b) external
Dual Effect of each Transaction :
The transaction must have a dual effect
on the equation.

Transaction Analysis
Some Transaction Analysis :
1. Mr. Ray Neal decides to open a computer
programming service which he names
Softbyte. On September1, 2010 he
invested $15,000 cash in the business.
2. Softbyte purchases computer equipment
for $7,000 cash.
3. Softbyte purchases computer paper and
other supplies for $1,600 from Acme
Supply Company.

4. Softbyte receives $1,200 cash from


customers for programming services it has
provided.
5. Softbyte receives a bill for $250 for the Daily
News for advertising but postpones payment
until a later date.
6. Softbyte provides $3,500 of programming
services for customers. The company
receives cash of $1,500 from customers and
it bills the balance of $2,000 on account.

7. Softbyte pats the following expenses


in cash for September : store rent $600,
salaries of employees $900 and utilities
$200.
8. Softbyte pays its Daily news bill in cash
$250.
9. Softbyte receives $600 in cash from
customers who had been billed for
services in transaction 6.

10. Ray Neal withdraws $1,300 in cash from


the business for his personal use.
Instructions:
a. Prepare a Tabular Summary from the
above transactions.
Or
Show the effects of the above transactions on
Accounting Equation.
b. Prepare an Income Statement , Owners
Equity Statement and Balance Sheet at
September 30, 2010.

You might also like