Ch.3 Accounting Mechanics

Ch.3 Accounting Mechanics - Accounting Mechanics Chapter 3...

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Click to edit Master subtitle style 12/26/10 Accounting Mechanics Chapter 3
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12/26/10 Analyzing Transactions The first step is determining which accounts are affected by the various activities of the business (buying, selling, borrowing, etc.) Each business activity is associated with one of the three parts of the accounting equation: Assets Liabilities Owner’s Equity You must determine whether the activity has increased or decreased one of those three parts
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12/26/10 Accountants do not think in terms of increases and decreases though : Instead they use the terms DEBIT and CREDIT These are the basis of the DOUBLE ENTRY SYSTEM: Analyzing Transactions
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12/26/10 Assets = Liabilities + Owner’s Equity Assets are on the left (DEBITS) Liabilities are on the right (CREDITS) Analyzing Transactions DEBITS CREDITS
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12/26/10 T-Accounts T-Account An analysis tool used to show the effect of transactions Account Name DEBIT CRED IT
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12/26/10 Rules of Debits and Credits Assets Normally carry DEBIT balances ASSETS DEBIT INCREASE CREDIT DECREASE
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This note was uploaded on 12/26/2010 for the course MGQ 201 taught by Professor Orrange during the Fall '09 term at SUNY Buffalo.

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Ch.3 Accounting Mechanics - Accounting Mechanics Chapter 3...

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