Accounting

1. Assets, Liabilities, Owners’ equity,
Revenues, Expenses and Net
income.
Six elements of accounting:
Point 3 Accounting Equation

2. Assets Liabilities Owners’ equity
Assets=Liabilities +Owners’ Equity
Double entry
Three basic elements of accounting
Introduction

3. Study objectives
• Use the accounting equation to present
accounting elements and their increases and
decreases.
• Analyze the effects of business transactions
on the accounting equation.
4 Accounting Equation

4. （ 1 ） The basic Equation
The accounting equation is the same for all economic entities.

5. The expanded Accounting Equation

6. Example
：
Classify the following items as assets,
liabilities, or Owner's equity:
•(1) cash, (2) service revenue,
•(3) drawings, (4) accounts receivable,
•(5) accounts payable,
•(6) salaries expense.

7. Transaction identification process:
（ 2 ） Transaction Analysis

8. • Transaction (1): Investment by Owner.
On September 1, 2015, Marc Douket invests
$15,000 cash in the business .

9. • Transaction (2): Purchase of
Equipment for Cash.
Softbyte purchases computer equipment
for $7,000 cash.

10. • Transaction (3): Purchase of Supplies on
Credit.
Softbyte purchases from the Tuch Supply
Company $1,600 of computer paper and other
supplies on Credit.

11. Summarizing
1. Each transaction must have effects on the three
components (assets, liabilities, and Owner's equity) of
the accounting equation
2. The two sides of the equation must always be equal.