Accounting 1 & 2

Transaction Analysis
AY 1 Sem. 2022-2023
st
 Transaction Analysis
Steps:
1. Identify the accounts affected by the
transaction. Asset, liability, owner’s capital ,
owner’s withdrawal, income or expense
account?
2. Determine the specific accounts affected .
3. Determine whether the accounts identified
will increase or decrease.
4. Which account should be debited or credited?
5. Determine the type of transaction
 Types & Effects of Transactions
1. Source of assets (SA) – an asset account
increases and a corresponding liability or
capital account increases;
Ex. -Purchase of supplies on account
- Sold goods on cash on delivery basis
Dr Supplies – Cr Liability
Dr Cash – Cr Capital
 Types & Effects of Transactions
.2. Exchange of Assets (EA) – One asset account
increases and another asset account deceases
Ex. Acquired equipment for cash
Dr Equipment
Cr Cash
3. Use of assets (UA) – an assets account decreases
and a corresponding liability or capital account
decreases;
Ex. Settled accounts payable
Dr Accounts payable – Cr Cash
 Types & Effects of Transactions
Ex. Paid salaries of employees
Dr Capital – Cr Cash
4. Exchange of claims (EC) – One liability or
capital account increases and one liability or
capital account decreases
Example
Received bill 1,000 for utilities but did not pay
Dr Capital (Utilities expense ) 1,000
Cr Accounts payable 1,000
 Transaction Analysis
• Indicate the effect of the following
transactions on the total assets, liabilities, and
capital (increase or decrease).
1. Received amount borrowed from bank
2. Additional investment in the business
3. Cash withdrawn for personal used
4. Bought machinery in cash
5. Paid amount due bank
Thank you