This document provides an overview of lesson 3 in an accounting course for beginners. It discusses 4 key learning objectives: 1) business transactions, 2) four transactions that affect the balance sheet, 3) four transactions that affect the income statement. It defines important terms like revenue, expense, assets, liabilities, and equity. It also summarizes the basic steps for analyzing a business transaction and the 8 most important types of transactions that affect financial statements.

1. Welcome,
dear Students
“ Account Double – any Trouble”
Accounting course for Beginners
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2. Lesson 3 Learning Objectives
1 Business Transactions
2 Four transactions that effect Balance Sheet
3 Four Transactions that effect Income
statement

3. Lesson 3 : What You’ll Learn
WHAT IT IS IMPORTANT WHAT IS NEEDED UNDERSTAND
Owner’s equity is changed
Accounts are used to analyze by revenue, expenses,
business transactions.
investments, and
Accounts receivable is the total amount withdrawals.
of money owed to a business
Accounts payable is the amount owed, How revenue and
or payable, to the creditors of a
business. expenses affect owner’s
equity.
How businesses use accounts. How withdrawals affect
The steps used to analyze owner’s equity.
a business transaction.

4. Key Terms :
 business transaction  revenue
 account  expense
 accounts receivable  withdrawal
 accounts payable
 investment
 on account

5. Summary: Basic Questions
What is my property ?
• what are the sources of my business
what a business owns
what a business owes
Am I successful in business?
• What I have made - ​a profit or loss

6. Summary: Property ( assets )
What is my property ?
Property is anything of value that a person or
business owns and therefore controls.
Property is measured in dollars.
In accounting, property appears in the
records at the amount it cost the owner.

7. Summary: Financial Claims
What are the sources of my business ?
Financial claims are the legal rights to property.
The term equities refers to the financial claims
on assets (property).
The two types of equities in a business are
• creditors’ financial claims, called liabilities, and
• the owner’s financial claims, called owner’s
equity.

8. Summary: Do you remember ?
The accounting equation is :
ASSETS = LIABILITIES + OWNER’S EQUITY

9. Summary:
Revenue and Expenses Revenue and Expenses
Am I successful in business?
• What I have made - ​a profit or loss ? Revenue Expenses
How to find out ? 5
- Compare Revenue and Expenses
4
Revenue is income from the sale of goods and
services. 3
Examples of revenue are fees earned for services
performed and cash received from the sale of
merchandise 2
To generate revenue most businesses must also incur 1
expenses to buy goods, materials, and services.
0
An expense is the cost of products or services used to
operate a business. Examples of business expenses Category
Category Category
are 1 2 Category
3
4
• rent,
• utilities, and
• advertising.

10. Most businesses have the following types of transactions:
Summary:
Business
Transactions
investments by the owner
withdrawals by the owner
credit transactions
revenue and expense transactions
A business transaction is an economic event that causes a change -
either an increase or a decrease - in assets, liabilities, or owner’s
equity.

11. Two Main Financial Statements
Balance Sheet
The main purpose of the balance sheet is to
report the assets of the business and the
claims against those assets on a specific date .
The balance sheet summarizes the following
Income Statement information:
The income statement reports the revenues
and expenses for a period of time
The excess of the revenue over the expenses
is called net income or net profit. If the
expenses exceed the revenue, the excess is a
net loss.
Am I successful in business? What a business owns and owes ?
What is business worth ?

12. Summary:
Business transactions inside - Balance Sheet
There are four main types of transactions between +
assets and liabilities (and capital) on the balance Liabilities
sheet to be remembered: (and
Capital)
+ _
Assets Liabilities
1. + Assets + Liabilities (Capital)
2. + Assets - Assets _
3. - Liabilities - Assets Assets
4. - Liabilities + Liabilities

13. Summary:
Business transactions between - Balance Sheet +
and Income Statement Liabilities
_
There are four main types of transactions between
Balance and Income Statement (and capital) to be Liabilitie
remembered: s
+ +
Revenues Expenses
_
1. - Assets + Expenses (Withdrawals) Assets
2. + Liabilities + Expenses +
3. + Assets + Revenue
4. - Liabilities + Revenue Assets

14. 8 Basic Business Transactions
Balance Sheet Income Statement
Nothing is so important in accounting as
learn eight basic business transactions.
If you can not, you have never learned
accounting.
+Assets +Liabilities +Expenses
1. + Assets + Liabilities (+Capital)
2. + Assets - Assets
3. - Liabilities - Assets -Assets -Liabilities +Revenue
4. - Liabilities + Liabilities
5. - Assets + Expenses (Withdrawals)
6. + Liabilities + Expenses
7. + Assets + Revenue
8. -Liabilities +Revenue

15. Summary: Use the following steps to analyze
a business transaction:
Step 1
• Identify the accounts affected.
Step 2
• Classify the accounts affected.
Step 3
• Determine the amount of
increase or decrease for each
account affected.
Step 4
Make sure the accounting
equation remains in balance.

16. Follow next Lesson
Thank you !
Lesson 4 : Transactions that effect Assets, Liabilities and Owner’s Capital
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