The document discusses the accounting equation of assets equaling liabilities plus owners' equity. It provides examples of common transactions that occur for a business and their dual effects on the accounting equation. These transactions are to be used to prepare a tabular summary, income statement, owners' equity statement, and balance sheet for a computer programming business called Softbyte for the month of September 2010.

1. Weygandt Kimmel Keiso
9th Edition)

2. Asset = Liabilities + Owners Equity
A = L + OE

3. 1) Asset:
 Resources owned by a business.
 Used in carrying out activities such as
production.
 Capacity to provide future benefit.

4. 2) Liabilities :
 Claims against asset.
 Existing debt and obligation.
3) Owners Equity:
 Owner claims against asset.
 Equals to total asset minus total liability.

5. Owners Equity
Investment by owner Withdrawal by owner
Revenues Expenses

6. Transaction:
Economic events that are recorded are 2
types:
a) internal
b) external
Dual Effect of each Transaction :
The transaction must have a dual effect on
the equation.

7. Some Transaction Analysis :
1. Mr. Ray Neal decides to open a computer
programming service which he names
Softbyte. On September1, 2010 he
invested $15,000 cash in the business.
2. Softbyte purchases computer equipment
for $7,000 cash.
3. Softbyte purchases computer paper and
other supplies for $1,600 from Acme
Supply Company.

8. 4. Softbyte receives $1,200 cash from
customers for programming services it has
provided.
5. Softbyte receives a bill for $250 for the
Daily News for advertising but postpones
payment until a later date.
6. Softbyte provides $3,500 of programming
services for customers. The company
receives cash of $1,500 from customers
and it bills the balance of $2,000 on
account.

9. 7. Softbyte paid the following expenses in
cash for September : store rent $600,
salaries of employees $900 and utilities
$200.
8. Softbyte pays its Daily news bill in cash
$250.
9. Softbyte receives $600 in cash from
customers who had been billed for services
in transaction 6.

10. 10. Ray Neal withdraws $1,300 in cash from
the business for his personal use.
Instructions:
a. Prepare a Tabular Summary from the above
transactions.
Or
Show the effects of the above transactions on
Accounting Equation.
b. Prepare an Income Statement , Owners Equity
Statement and Balance Sheet at September 30,
2010.