Accounting and Finance Foundations

Unit 5

Accounting and Finance Foundations Unit 5: Accounting Terminology 340

Accounting Terminology

Chapter 14

Assets = Liabilities + Owner’s Equity

Trans.

No.

Cash + Supplies + Accounts

Receivable,

Lisa Cook

+ Prepaid

Insurance

= Accounts

Payable

Office

Supply

+ Your

Name,

Capital

+ Rev. - Expenses - Drawing

1. 7500 + + + = + 7500 + - -


2. -300
   7200

+ +300 + + = + 7500 + - -

3. -550
   6650

+ 300 + + +550 = + 7500 + - -

4. 6650 + +450
   750

+ + 550 = +450 + 7500 + - -

5. -200
   6450

+ 750 + + 550 = -200

250

+ 7500 + - -

6. +1200
   7650

+ 750 + + 550 = 250 + 7500 + 1200 - -

7. -800
   6850

+ 750 + + 550 = 250 + 7500 + 1200 - 800 -

8. 6850 + 750 + + 1000
   1000

+ 550 = 250 + 7500 + +1000

2200

• 800 -

9. +750
   7600

+ 750 + -750

250

+ 550 = 250 + 7500 + 2200 - 800 -

10. -900
    900

+ 750 + 250 + 550 = 250 + 7500 + 2200 - 800 - 900

900

Transaction 10

The drawing account is used when an owner withdraws either cash or merchandise for personal use.

Paid cash to the owner for personal use, $900

When cash is withdrawn from the business by the owner for his own personal use, the two accounts

affected are Cash and Your Name, Drawing. Cash is classified as an asset; anytime you pay cash, cash

decreases. Your Name, Drawing is classified as a drawing account. Although Drawing is its own specific

classification, Drawing does decrease owner’s equity.

Student Guide