《基础会计学 刘峰》Lesson03-en.pptVIP

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Transactions, Accounts and Rules of Debits Credits cont Payment on account decreases both assets and liabilities. Personal transactions of the owner do not affect the business, per the entity concept. Collection of cash on account increases assets and decreases assets. Sale of an asset at a price equal to its cost increases assets and decreases assets. Declaration and payment of cash dividends decreases both assets and stockholders’ equity. * An Practical Illustration Do you still remember the example of Beauty Photo Store? We are using it again here! Remember always:The accounting equation must remain in balance after each transaction has been recorded. * An Practical Illustration cont Wang Fang invests $30,000 cash to start her business of Beauty Photo Store.The accounts involved are: 1 Cash asset  2 Owner’s Equity equity * An Practical Illustration cont * Wang Fang invests $30,000 cash to start her business. An Practical Illustration cont Purchased supplies paying $2,500 cash.  The accounts involved are: 1 Cash asset 2 Supplies asset * An Practical Illustration cont Purchased supplies paying $2,500 cash. * An Practical Illustration cont Purchased camera and producing equipment for the store for $20,000 cash. The accounts involved are: 1 Cash asset 2 equipment asset * An Practical Illustration cont Purchased equipment for the store for $20,000 cash. * An Practical Illustration cont Purchased supplies of $1,100 on account and equipment of $6,000 by signing a note. The accounts involved are: 1 Supplies asset 2 Equipment asset 3 Accounts payable liability 4 Notes payable liability * An Practical Illustration cont Purchased supplies of $1,100 on account and equipment of $6,000 by signing a note. * An Practical Illustration cont Now let’s look at transactions involvingrevenues and expenses. * An Practical Illustrati