Chapter 2 Vocab

T account An accounting device used to analyze transactions

Debit An amount recorded on the left side of a T account
Credit An amount recorded on the right side of T account
Normal balance The side of the account that is increased
Chart of accounts A list of accounts used by a business

Chapter 2- Analyze Transactions into Debit and Credit Parts

A.

=
Liabilities and Owners Equity
_______________________
Right

Assets
Left

B.

T Account
_______________________
Left
Debit

Right
Credit

C. Withdrawal- Owners name, drawing

D. Assets = Liabilities + Owners Equity (Capital)
DR CR
DR CR
DR
CR
+
Bal

+
Bal

Bal

Accounts that affect Owners Equity

Revenue
DR CR

Expense
DR CR

+
Bal

+
Bal

Drawing
DR CR

+
Bal

E. Minus opposite plus side.

Balance on plus side
F. Four Questions:
1. What two accounts?
2. What classification?
3. Plus or Minus?
4. Debit or Credit?

Asset Drawing Expense

Debit
+
Balance

Credit
-

Capital Liability Revenue

Debit
-

+
Balance

Credit

G. Chart of Accounts A list of accounts used by a business.

Application 2-1 Form

Accounts Normal Balance
Account
Cash
Accounts
Rec.- Jens
Olefson
Accounts
Rec.- Toni
Nolan
Supplies
Prepaid
Insurance
Accounts
Pay.- United
Co.
Juan Reo,
Capital

Account
Classificatio
Debit
n
Asset
X

Increase Side

Credit

Debit

Decrease Side

Credit

Debit

Asset

Asset

Asset

Asset

Liability

Owners
Equity

Decrease Side
Credit
X
X

X
X
X

Trans. No.

Account Affected

Accounts
Classification

Entered in account as a
Debit

1 Cash
Adriana Janek, Capital
2 Utilities Expense
Cash

Asset

4
5
6
7
8
9
10
11
12
13

x
x

Asset

3 Misc. Expense
Cash

Owners Equity
Expense

Credit

x
x

Asset

Description of transaction

Received cash from owner as an investment.

Paid cash for water bill.