Académique Documents
Professionnel Documents
Culture Documents
Accounts receivable
Computer equipment
Office equipment
Delivery equipment
TRANSACTIONS THAT AFFECT OWNER’S
INVESTMENT, CASH, AND CREDIT
Effects of Transactions on the Accounting Equation
▪ To analyze a business transaction, follow these steps:
▪ Identify the accounts affected
▪ Classify the accounts affected
▪ What does it mean to classify accounts?
To determine whether they are assets, liabilities, or owner’s equity
▪ Determine the amount of increase or decrease for each account affected
▪ Make sure the accounting equation remains in balance
TRANSACTIONS THAT AFFECT OWNER’S
INVESTMENT, CASH, AND CREDIT
Investments by the Owner
Money or other property paid out in order to produce profit is an investment