Accounting and Finance Foundations

Unit 5

Accounting and Finance Foundations Unit 5: Accounting Terminology 337

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 -

Transaction 7

Paid cash for rent, $800

When cash is paid for rent, the two accounts affected are Cash and the Rent Expense account. Cash is

classified as an asset. Anytime you pay cash, cash decreases. Rent Expense is classified as an expense.

Although expenses are their own specific classification, they do decrease owner’s equity.

Student Guide