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4.3 The Rules for Assets, Liabilities and Owner's Equity

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VCE Accounting - Michael Allison
VCE Accounting - Michael Allison

VCE Accounting Unit 3. Video of this presentation can be found on my YouTube channel here https://www.youtube.com/channel/UCf5jyuJoYwie8tWfvjEc0zg.

Education
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4.3 THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY
Video of this presentation at… YouTube Channel for VCE Accounting
© Michael Allison. Author’s permission required for external use.  So how do you know which entries are DEBITS and which entries are CREDITS?  How do we know to make a DEBIT in Wages and a CREDIT in Cash at Bank? 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Wages [E] 31/12 Cash at Bank 500 DEBIT Cash at Bank [A] 31/12 Wages 500 CREDIT
© Michael Allison. Author’s permission required for external use.  There are rules for double-entry that must always be followed – whether you make a DEBIT or a CREDIT entry will depend on two factors: 1. The type or classification of the account affected. Is it a:  Asset?  Liability?  Owner’s Equity?  Revenue?  Expense? 2. Whether the account in question is increasing or decreasing in value 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY
© Michael Allison. Author’s permission required for external use.  The rules for:  Assets  Liabilities  Owner’s Equity… Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY
© Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE  Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE  25000 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
© Michael Allison. Author’s permission required for external use. Capital [OE[ Date Details $ Date Details $ Cash at Bank [A] Date Details $ Date Details $ Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE  25000 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 Capital [OE[ Date Details $ Date Details $ 1 Jan Cash at Bank 25000 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE  25000 Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE  25000
© Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L  Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L  10000 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
© Michael Allison. Author’s permission required for external use. Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 2 Jan Loan 10000 Loan [L] Date Details $ Date Details $ 2 Jan Cash at Bank 10000 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 2 Jan Loan 10000 Loan [L] Date Details $ Date Details $ 2 Jan Cash at Bank 10000 Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L  10000 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L  10000 Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L  10000
© Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  3300 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
© Michael Allison. Author’s permission required for external use. Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 3 Jan Computer/GST Liability 3300 1 Jan Loan 10000 Computer [A] Date Details $ Date Details $ 3 Jan Cash at Bank 3000 GST Liability [L] Date Details $ Date Details $ 3 Jan Cash at Bank 300 Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  3300 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 3 Jan Computer/GST Liability 3300 1 Jan Loan 10000 Computer [A] Date Details $ Date Details $ 3 Jan Cash at Bank 3000 GST Liability [L] Date Details $ Date Details $ 3 Jan Cash at Bank 300 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  3300 Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  3300 Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  3300
© Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  500 Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  500 Cash Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  500 Cash A Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  500 Cash A  Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  500 Cash A  500 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
© Michael Allison. Author’s permission required for external use. Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 Loan [L] Date Details $ Date Details $ 4 Jan Cash at Bank 500 1 Jan Cash at Bank 10000 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $500 Loan L  500 Cash A  500 Loan [L] Date Details $ Date Details $ 4 Jan Cash at Bank 500 1 Jan Cash at Bank 10000 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $500 Loan L  500 Cash A  500 Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $500 Loan L  500 Cash A  500
© Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  660 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
© Michael Allison. Author’s permission required for external use. Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 5 Jan Stock/GST Liability 660 Stock [A] Date Details $ Date Details $ 5 Jan Cash at Bank 600 GST Liability [L] Date Details $ Date Details $ 3 Jan Cash at Bank 300 5 Jan Cash at Bank 60 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 5 Jan Stock/GST Liability 660 Stock [A] Date Details $ Date Details $ 5 Jan Cash at Bank 600 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  660 GST Liability [L] Date Details $ Date Details $ 3 Jan Cash at Bank 300 5 Jan Cash at Bank 60 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  660 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  660 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  660
© Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE  Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE  800 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
© Michael Allison. Author’s permission required for external use. Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 6 Jan Capital 800 5 Jan Stock/GST Liability 660 Capital [OE[ Date Details $ Date Details $ 1 Jan Cash at Bank 25000 6 Jan Cash at Bank 800 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 6 Jan Capital 800 5 Jan Stock/GST Liability 660 Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE  800 Capital [OE[ Date Details $ Date Details $ 1 Jan Cash at Bank 25000 6 Jan Cash at Bank 800 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE  800 Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE  800
© Michael Allison. Author’s permission required for external use. TASK In-class Homework SQ5 X

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4.3 The Rules for Assets, Liabilities and Owner's Equity

  • 1. 4.3 THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY
  • 2. Video of this presentation at… YouTube Channel for VCE Accounting
  • 3. © Michael Allison. Author’s permission required for external use.  So how do you know which entries are DEBITS and which entries are CREDITS?  How do we know to make a DEBIT in Wages and a CREDIT in Cash at Bank? 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Wages [E] 31/12 Cash at Bank 500 DEBIT Cash at Bank [A] 31/12 Wages 500 CREDIT
  • 4. © Michael Allison. Author’s permission required for external use.  There are rules for double-entry that must always be followed – whether you make a DEBIT or a CREDIT entry will depend on two factors: 1. The type or classification of the account affected. Is it a:  Asset?  Liability?  Owner’s Equity?  Revenue?  Expense? 2. Whether the account in question is increasing or decreasing in value 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY
  • 5. © Michael Allison. Author’s permission required for external use.  The rules for:  Assets  Liabilities  Owner’s Equity… Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY
  • 6. © Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE  Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE  25000 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
  • 7. © Michael Allison. Author’s permission required for external use. Capital [OE[ Date Details $ Date Details $ Cash at Bank [A] Date Details $ Date Details $ Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE  25000 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 Capital [OE[ Date Details $ Date Details $ 1 Jan Cash at Bank 25000 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE  25000 Transaction Account Classification Increase / Decrease Debit Credit 1. The owner contributed $25,000 to commence the business Cash A  25000 Capital OE  25000
  • 8. © Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L  Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L  10000 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
  • 9. © Michael Allison. Author’s permission required for external use. Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 2 Jan Loan 10000 Loan [L] Date Details $ Date Details $ 2 Jan Cash at Bank 10000 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 2 Jan Loan 10000 Loan [L] Date Details $ Date Details $ 2 Jan Cash at Bank 10000 Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L  10000 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L  10000 Transaction Account Classification Increase / Decrease Debit Credit 2. The business took out a loan for $10,000 Cash A  10000 Loan L  10000
  • 10. © Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  3300 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
  • 11. © Michael Allison. Author’s permission required for external use. Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 3 Jan Computer/GST Liability 3300 1 Jan Loan 10000 Computer [A] Date Details $ Date Details $ 3 Jan Cash at Bank 3000 GST Liability [L] Date Details $ Date Details $ 3 Jan Cash at Bank 300 Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  3300 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 3 Jan Computer/GST Liability 3300 1 Jan Loan 10000 Computer [A] Date Details $ Date Details $ 3 Jan Cash at Bank 3000 GST Liability [L] Date Details $ Date Details $ 3 Jan Cash at Bank 300 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  3300 Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  3300 Transaction Account Classification Increase / Decrease Debit Credit 3. Purchased a computer for cash for $3,000 plus $300 GST Computer A  3000 GST Liability L  300 Cash A  3300
  • 12. © Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  500 Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  500 Cash Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  500 Cash A Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  500 Cash A  Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $1,000 Loan L  500 Cash A  500 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
  • 13. © Michael Allison. Author’s permission required for external use. Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 Loan [L] Date Details $ Date Details $ 4 Jan Cash at Bank 500 1 Jan Cash at Bank 10000 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $500 Loan L  500 Cash A  500 Loan [L] Date Details $ Date Details $ 4 Jan Cash at Bank 500 1 Jan Cash at Bank 10000 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $500 Loan L  500 Cash A  500 Transaction Account Classification Increase / Decrease Debit Credit 4. Made a loan repayment of $500 Loan L  500 Cash A  500
  • 14. © Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  660 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
  • 15. © Michael Allison. Author’s permission required for external use. Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 5 Jan Stock/GST Liability 660 Stock [A] Date Details $ Date Details $ 5 Jan Cash at Bank 600 GST Liability [L] Date Details $ Date Details $ 3 Jan Cash at Bank 300 5 Jan Cash at Bank 60 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 5 Jan Stock/GST Liability 660 Stock [A] Date Details $ Date Details $ 5 Jan Cash at Bank 600 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  660 GST Liability [L] Date Details $ Date Details $ 3 Jan Cash at Bank 300 5 Jan Cash at Bank 60 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  660 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  660 Transaction Account Classification Increase / Decrease Debit Credit 5. Bought stock for $600 cash plus GST of $60 Stock A  600 GST Liability L  60 Cash A  660
  • 16. © Michael Allison. Author’s permission required for external use. Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE  Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE  800 Debit Credit Assets   Liabilities   Owner’s Equity   4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity   Debit Credit Assets   Liabilities   Owner’s Equity  
  • 17. © Michael Allison. Author’s permission required for external use. Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 6 Jan Capital 800 5 Jan Stock/GST Liability 660 Capital [OE[ Date Details $ Date Details $ 1 Jan Cash at Bank 25000 6 Jan Cash at Bank 800 Cash at Bank [A] Date Details $ Date Details $ 1 Jan Capital 25000 1 Jan Computer/GST Liability 3300 1 Jan Loan 10000 4 Jan Loan 500 6 Jan Capital 800 5 Jan Stock/GST Liability 660 Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE  800 Capital [OE[ Date Details $ Date Details $ 1 Jan Cash at Bank 25000 6 Jan Cash at Bank 800 4.3 - THE RULES FOR ASSETS, LIABILITIES AND OWNER'S EQUITY Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE  800 Transaction Account Classification Increase / Decrease Debit Credit 6. The owner contributed $800 to the business Cash A  800 Capital OE  800
  • 18. © Michael Allison. Author’s permission required for external use. TASK In-class Homework SQ5 X