Uploaded byAnamulHoque43
PPTX, PDF170 views

recording of transactions. pdf.pptx

The document discusses the basic steps in the accounting recording process: 1. Transactions are recorded in a journal which shows debits and credits. 2. Journal entries are then posted to individual accounts in the general ledger. 3. Accounts in the general ledger track increases and decreases to assets, liabilities, equity, revenues and expenses through debit and credit entries.

Embed presentation

Download to read offline
The Recording Process
After studying this chapter, you should be able to: THE RECORDING PROCESS 1 Explain what an account is and how it helps in the recording process 2 Define debits and credits and explain how they are used to record business transactions 3 Identify the basic steps in the recording process 4 Explain what a journal is and how it helps in the recording process
5 Explain what a ledger is and how it helps in the recording process 6 Explain what posting is and how it helps in the recording process 7 Prepare a trial balance and explain its purpose After studying this chapter, you should be able to: THE RECORDING PROCESS
THE ACCOUNT STUDY OBJECTIVE 1 • An account is an individual accounting record of increases and decreases in a specific asset, liability, or owner’s equity item. • There are separate accounts for the items we used in transactions such as cash, salaries expense, accounts payable, etc.
BASIC FORM OF ACCOUNT STUDY OBJECTIVE 2 • The simplest form an account consists of 1 the title of the account 2 a left or debit side 3 a right or credit side • The alignment of these parts resembles the letter T = T account Left or debit side Title of Account Right or credit side Debit balance Credit balance
DEBITS AND CREDITS • Debit indicates left and Credit indicates right • Recording $ on the left side of an account is debiting the account • Recording $ on the right side is crediting the account • If the total of debit amounts is bigger than credits, the account has a debit balance • If the total of credit amounts is bigger than debits, the account has a credit balance
TABULAR SUMMARY COMPARED TO ACCOUNT FORM
Cash Debits Credits 15,000 Example: The owner makes an initial investment of $15,000 to start the business. Cash is debited as the owner’s Capital is credited. DEBITING AN ACCOUNT
Example: Monthly rent of $7,000 is paid. Cash is credited as Rent Expense is debited. CREDITING AN ACCOUNT Cash Debits Credits 7,000
DEBITING / CREDITING AN ACCOUNT Cash Debits Credits 15,000 7,000 8,000 Example: Cash is debited for $15,000 and credited for $7,000, leaving a debit balance of $8,000.
DOUBLE-ENTRY SYSTEM • equal debits and credits made accounts for each transaction • total debits always equal the total credits • accounting equation always stays in balance Assets Liabilities Equity
DEBIT AND CREDIT EFFECTS — ASSETS AND LIABILITIES Debits Credits Increase assets Decrease assets Decrease liabilities Increase liabilities
NORMAL BALANCE • every account has a designated normal balance. –It is either a debit or credit. • accounts rarely have an abnormal balance.
NORMAL BALANCES — ASSETS AND LIABILITIES Assets Increase Decrease Debit Credit Decrease Increase Debit Credit Liabilities •Normal Balance Normal Balance
DEBIT AND CREDIT EFFECTS — OWNER’S CAPITAL Debits Credits Decrease owner’s capital Increase owner’s capital
NORMAL BALANCE — OWNER’S CAPITAL Owner’s Capital Decrease Increase Debit Credit Normal Balance
DEBIT AND CREDIT EFFECTS — OWNER’S DRAWING Debits Credits Increase owner’s drawing Decrease owner’s drawing Remember, Drawing is a contra-account – an account that is backwards from the account it accompanies (the Capital account).
NORMAL BALANCE — OWNER’S DRAWING Owner’s Drawing Normal Balance Increase Decrease Debit Credit
DEBIT AND CREDIT EFFECTS — REVENUES AND EXPENSES Decrease revenues Increase revenues Increase expenses Decrease expenses Debits Credits
NORMAL BALANCES — REVENUES AND EXPENSES Increase Decrease Debit Credit Expenses Revenues Decrease Increase Debit Credit Normal Balance Normal Balance
EXPANDED BASIC EQUATION AND DEBIT/CREDIT RULES AND EFFECTS Liabilities Assets Owner’s Equity = + - + = + - Assets Dr. Cr. + - Liabilities Dr. Cr. - + Dr. Cr. Owner’s Drawing + - Dr. Cr. Revenues - + Dr. Cr. Expenses + - Dr. Cr. Owner’s Capital - +
THE RECORDING PROCESS STUDY OBJECTIVE 3 1 analyze each transaction (+, -) 2 enter transaction in a journal 3 transfer journal information to ledger accounts
THE JOURNAL STUDY OBJECTIVE 4 • Transactions – Are initially recorded in chronological order before they are transferred to the ledger accounts. • A general journal has 1 spaces for dates 2 account titles and explanations 3 references 4 two amount columns
A journal makes several contributions to recording process: 1 discloses in one place the complete effect of a transaction 2 provides a chronological record of transactions 3 helps to prevent or locate errors as debit and credit amounts for each entry can be compared THE JOURNAL
JOURNALIZING • Entering transaction data in the journal is known as journalizing. • Separate journal entries are made for each transaction. • A complete entry consists of: 1 the date of the transaction, 2 the accounts and amounts to be debited and credited, 3 a brief explanation of transaction.
TECHNIQUE OF JOURNALIZING The date of the transaction is entered into the date column. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
TECHNIQUE OF JOURNALIZING The debit account title is entered at the extreme left margin of the Account Titles and Explanation column. The credit account title is indented on the next line. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
TECHNIQUE OF JOURNALIZING The amounts for the debits are recorded in the Debit column and the amounts for the credits are recorded in the Credit column. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
TECHNIQUE OF JOURNALIZING A brief explanation of the transaction is given. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
TECHNIQUE OF JOURNALIZING A space is left between journal entries. The blank space separates individual journal entries and makes the entire journal easier to read. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
TECHNIQUE OF JOURNALIZING The column entitled Ref. is left blank at the time journal entry is made and is used later when the journal entries are transferred to the ledger accounts. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 July 1 Cash 20,000 K. Browne, Capital 20,000 (Invested cash in the business) If an entry involves only two accounts, one debit and one credit, it is considered a simple entry. SIMPLE AND COMPOUND JOURNAL ENTRIES
When three or more accounts are required in one journal entry, the entry is referred to as a compound entry. COMPOUND JOURNAL ENTRY 2 1 3 GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 July 1 Delivery Equipment 14,000 Cash 8,000 Accounts Payable 6,000 (Purchased truck for cash with balance on account)
GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 July 1 Cash 8,000 Delivery Equipment 14,000 Accounts Payable 6,000 (Purchased truck for cash with balance on account) COMPOUND JOURNAL ENTRY This is the wrong format; all debits must be listed before the credits are listed.
THE LEDGER STUDY OBJECTIVE 5 A Group of accounts maintained by a company is called the ledger. A general ledger contains all the assets, liabilities, and owner’s equity accounts
POSTING A JOURNAL ENTRY In the ledger, enter in the appropriate columns of the account(s) debited the date, journal page, and debit amount shown in the journal. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 10 15,000 R. Neal, Capital 25 15,000 (invested cash in business) R. NEAL, CAPITAL NO. 25 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000 GENERAL LEDGER CASH NO. 10 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000
POSTING A JOURNAL ENTRY R. NEAL, CAPITAL NO. 25 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000 GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 10 15,000 R. Neal, Capital 25 15,000 (invested cash in business) GENERAL LEDGER CASH NO. 10 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000 In the reference column of the journal, write the account number to which the debit amount was posted.
POSTING A JOURNAL ENTRY In the ledger, enter in the appropriate columns of the account(s) credited the date, journal page, and credit amount shown in the journal. R. NEAL, CAPITAL NO. 25 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000 GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 10 15,000 R. Neal, Capital 25 15,000 (invested cash in business) GENERAL LEDGER CASH NO. 10 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000
POSTING A JOURNAL ENTRY In the reference column of the journal, write the account number to which the credit amount was posted. R. NEAL, CAPITAL NO. 25 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000 GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 10 15,000 R. Neal, Capital 25 15,000 (invested cash in business) GENERAL LEDGER CASH NO. 10 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000
A Chart of Accounts lists the accounts and the account numbers which identify their location in the ledger. CHART OF ACCOUNTS
INVESTMENT OF CASH BY OWNER Basic Analysis Debit-Credit Analysis Transaction October 1, C.R. Byrd invests $10,000 cash in an advertising business known as: The Pioneer Advertising Agency. •The asset Cash is increased $10,000 •Owner’s equity, C. R. Byrd, Capital is increased $10,000. Debits increase assets: debit Cash $10,000. Credits increase owner’s equity: credit C.R. Byrd, Capital $10,000.
PURCHASE OF OFFICE EQUIPMENT C. R. Byrd, Capital 301 Oct. 1 10,000 Cash 101 Oct. 1 10,000 Date Account Titles and Explanation Ref. Debit Credit Oct. 1 Cash 101 10,000 C. R. Byrd, Capital 301 10,000 (Owner invests $10,000 In the business) JOURNAL ENTRY POSTING
INVESTMENT OF CASH BY OWNER Basic Analysis Debit-Credit Analysis Transaction October 1, C. R. Byrd purchases $5,000 of equipment by issuing a 3-month, 12% note payable. •The asset Office Equipment is increased $5,000. •The liability, Notes Payable is increased $5,000. Debits increase assets: debit Office Equipment $5,000. Credits increase liabilities: credit Notes Payable $5,000.
PURCHASE OF OFFICE EQUIPMENT Notes Payable 200 Oct. 1 5,000 Office Equipment 157 Oct. 1 5,000 Date Account Titles and Explanation Ref. Debit Credit Oct. 1 Office Equipment 157 5,000 Notes Payable 200 5,000 (Issued 3-month, 12% note for office equipment) JOURNAL ENTRY POSTING
RECEIPT OF CASH FOR FUTURE SERVICE Basic Analysis Debit-Credit Analysis Transaction October 2, a $1,200 cash advance is received from a client, for advertising services expected to be completed by December 31. Asset Cash is increased $1,200 Liability Unearned Fees is increased $1,200 •Service has not been rendered yet. Liabilities often have the word “payable” in their title, Unearned fees are a liability. Debits increase assets: debit Cash $1,200. Credits increase liabilities: credit Unearned Fees $1,200.
RECEIPT OF CASH FOR FUTURE SERVICE Unearned Fees 209 Oct. 2 1,200 Cash 101 Oct. 1 10,000 2 1,200 Date Account Titles and Explanation Ref. Debit Credit Oct. 2 Cash 101 1,200 Unearned Fees 209 1,200 (Received advance from R. Knox for future services) JOURNAL ENTRY POSTING
PAYMENT OF MONTHLY RENT Basic Analysis Debit-Credit Analysis Transaction October 3, office rent for October is paid in cash, $900. The expense Rent is increased $900 Payment pertains only to the current month Asset Cash is decreased $900. Debits increase expenses: debit Rent Expense $900. Credits decrease assets: credit Cash $900.
PAYMENT OF RENT EXPENSE Cash 101 Oct. 1 10,000 Oct. 3 900 Oct. 2 1,200 Rent Expense 729 Oct. 3 900 Date Account Titles and Explanation Ref. Debit Credit Oct. 3 Rent Expense 729 900 Cash 101 900 (Paid $900 for October rent) JOURNAL ENTRY POSTING
PAYMENT FOR INSURANCE -Asset Prepaid Insurance increases $600 -Payment extends to more than the current month -Asset Cash is decreased $600. -Payments of expenses benefiting more than one period are prepaid expenses or prepayments. Transaction October 4, $600 Paid one-year insurance policy- expires next year on September 30. Debit-Credit Analysis Debits increase assets: debit Prepaid Insurance $600. Credits decrease assets: credit Cash $600. Basic Analysis
PAYMENT FOR INSURANCE Cash 101 Oct. 1 10,000 Oct. 3 900 2 1,200 4 600 Date Account Titles and Explanation Ref. Debit Credit Oct. 4 Prepaid Insurance 130 600 Cash 101 600 (Paid one-year policy; effective date October 1) JOURNAL ENTRY POSTING Prepaid Insurance 130 Oct. 4 600
PURCHASE OF SUPPLIES ON CREDIT Basic Analysis Debit-Credit Analysis Transaction October 5, an estimated 3-month supply of advertising materials is purchased on account from Aero Supply for $2,500. The asset Advertising Supplies is increased $2,500; the liability Accounts Payable is increased $2,500. Debits increase assets: debit Advertising Supplies $2,500. Credits increase liabilities: credit Accounts Payable $2,500.
PURCHASE OF SUPPLIES ON CREDIT Accounts Payable 201 Oct. 5 2,500 Advertising Supplies 126 Oct. 5 2,500 Date Account Titles and Explanation Ref. Debit Credit Oct. 5 Advertising Supplies 126 2,500 Accounts Payable 201 2,500 (Purchased supplies on account from Aero Supply) JOURNAL ENTRY POSTING
HIRING OF EMPLOYEES Basic Analysis Debit-Credit Analysis Transaction October 9, hire four employees to begin work on October 15. Each employee is to receive a weekly salary of $500 for a 5-day work week, payable every 2 weeks -- first payment made on October 26. A business transaction has not occurred only an agreement between the employer and the employees to enter into a business transaction beginning on October 15. A debit-credit analysis is not needed because there is no accounting entry.
WITHDRAWAL OF CASH BY OWNER Basic Analysis Debit-Credit Analysis Transaction October 20, C. R. Byrd withdraws $500 cash for personal use. The owner’s equity account C. R. Byrd, Drawing is increased $500. The asset Cash is decreased $500. Debits increase drawings: debit C. R. Byrd, Drawing $500. Credits decrease assets: credit Cash $500.
WITHDRAWAL OF CASH BY OWNER C. R. Byrd, Drawing 306 Oct. 20 500 Cash 101 Oct. 1 10,000 Oct. 3 900 2 1,200 4 600 20 500 Date Account Titles and Explanation Ref. Debit Credit Oct. 20 C. R. Byrd, Drawing 306 500 Cash 101 500 (Withdrew cash for personal use) JOURNAL ENTRY POSTING
PAYMENT OF SALARIES Basic Analysis Debit-Credit Analysis Transaction October 26, employee salaries of $4,000 are owed and paid in cash. (See October 9 transaction.) The expense account Salaries Expense is increased $4,000; the asset Cash is decreased $4,000. Debits increase expenses: debit Salaries Expense $4,000. Credits decrease assets: credit Cash $4,000.
PAYMENT OF SALARIES Date Account Titles and Explanation Ref. Debit Credit Oct. 26 Salaries Expense 726 4,000 Cash 101 4,000 (Paid salaries to date) Cash 101 Oct. 1 10,000 Oct. 3 900 2 1,200 4 600 20 500 26 4,000 JOURNAL ENTRY POSTING Salaries Expense 726 Oct. 26 4,000
RECEIPT OF CASH FOR FEES EARNED Basic Analysis Debit-Credit Analysis Transaction October 31, received $10,000 in cash from Copa Company for advertising services rendered in October. The asset Cash is increased $10,000; the revenue Fees Earned is increased $10,000. Debits increase assets: debit Cash $10,000. Credits increase revenues: credit Fees Earned $10,000.
RECEIPT OF CASH FOR FEES EARNED Cash 101 Oct. 1 10,000 Oct. 3 900 2 1,200 4 600 31 10,000 20 500 26 4,000 Date Account Titles and Explanation Ref. Debit Credit Oct. 31 Cash 101 10,000 Fees Earned 400 10,000 (Received cash for fees earned) Fees Earned 400 Oct. 31 10,000 JOURNAL ENTRY POSTING
THE TRIAL BALANCE STUDY OBJECTIVE 7 • The trial balance is a list of accounts and their balances at a given time. • The primary purpose of a trial balance is to prove debits = credits after posting. • If debits and credits do not agree, the trial balance can be used to uncover errors in journalizing and posting.
THE TRIAL BALANCE The Steps in preparing the Trial Balance are: 1. List the account titles and balances 2. Total the debit and credit columns 3. Prove the equality of the two columns
PIONEER ADVERTISING AGENCY Trial Balance October 31, 2005 Debit Credit Cash $ 15,200 Advertising Supplies 2,500 Prepaid Insurance 600 Office Equipment 5,000 Notes Payable $ 5,000 Accounts Payable 2,500 Unearned Fees 1,200 C. R. Byrd, Capital 10,000 C. R. Byrd, Drawing 500 Fees Earned 10,000 Salaries Expense 4,000 Rent Expense 900 $ 28,700 $ 28,700 The total debits must equal the total credits. A TRIAL BALANCE
LIMITATIONS OF A TRIAL BALANCE • A trial balance does not prove all transactions have been recorded or the ledger is correct. • Numerous errors may exist even though the trial balance columns agree. For example, the trial balance may balance even when: – a transaction is not journalized – a correct journal entry is not posted – a journal entry is posted twice – incorrect accounts used in journalizing or posting – offsetting errors are made in recording
Chapter 2 Which one of the following represents the expanded basic accounting equation? a. Assets = Liabilities + Owner’s Capital + Owner’s Drawings – Revenue - Expenses. b. Assets + Owner’s Drawings + Expenses = Liabilities + Owner’s Capital + Revenue. c. Assets – Liabilities – Owner’s Drawings = Owner’s Capital + Revenue – Expenses. d. Assets = Revenue + Expenses – Liabilities.
Chapter 2 Which one of the following represents the expanded basic accounting equation? a. Assets = Liabilities + Owner’s Capital + Owner’s Drawings – Revenue - Expenses. b. Assets + Owner’s Drawings + Expenses = Liabilities + Owner’s Capital + Revenue. c. Assets – Liabilities – Owner’s Drawings = Owner’s Capital + Revenue – Expenses. d. Assets = Revenue + Expenses – Liabilities.

More Related Content

PDF
Bridgestone Tire Store
byMarie Haines
 
PPTX
Du pont analysis
byVinit Khushalani
 
PPT
Rolls royce (2)
byHarshit Jain
 
PPTX
Ford
byRohit Kumar
 
PPTX
SBI PRODUCT & SERVICES
bybinu nair
 
DOCX
Home loans
bySHIVANI JADON
 
PPTX
Harley Davidson in India
byTushar Singh
 
DOCX
Bank reconciliation statement
byParth Kishan
 
Bridgestone Tire Store
byMarie Haines
 
Du pont analysis
byVinit Khushalani
 
Rolls royce (2)
byHarshit Jain
 
Ford
byRohit Kumar
 
SBI PRODUCT & SERVICES
bybinu nair
 
Home loans
bySHIVANI JADON
 
Harley Davidson in India
byTushar Singh
 
Bank reconciliation statement
byParth Kishan
 

Similar to recording of transactions. pdf.pptx

PPT
The Recording Process.ppt
byfunderjimedieinc
 
PPT
Chapter 2.ppt
byShihab61
 
PPT
Introduction to Accountingch02
byRaed Felfel
 
PPTX
JOURNALIZING.pptx
byMarcelVelasco1
 
PPT
vdocuments.mx_chapter-2-the-recording-process-accounting-principles-7-th-edit...
bymustafe44
 
PPT
notes for journal entries for undergraduate
bySathyaDinesh2
 
PPTX
Chapter 2, Fundamentals of Accounting I (2).pptx
byKalkaye
 
PDF
Lecture # 04 (Recording Process) FA..pdf
byRehanIftikhar7
 
PPT
Chapter 2: The Recording Process
bytepsokha
 
PPTX
Accounting cycle
byVishal Kukreja
 
PPT
Accounting Cycle - Journals - Capturing accounting event
byFaHaD .H. NooR
 
PDF
Chapter Two.pdf
bymohamedfaisal300400
 
PPT
Double_Entry_Accounting.ppt
byLuminaJulie1
 
PPT
Acc4201#2
byInternational Islamic University Chittagong
 
PPT
2.JOURNAL.ppt
byAcacollegeforCMA
 
PPTX
Introduction of accounting- nency
byNency Parihar
 
PPTX
ch02 The recording process kieso i guess.pptx
byRickySuhartono2
 
PPTX
ch02-.pptx.accounting fundamental for recording
byponyking86
 
DOCX
Process customerggggggggggsssssfkkkkkkkkkd
byandudereje249
 
PPTX
J.pptx
byMarcelVelasco1
 
The Recording Process.ppt
byfunderjimedieinc
 
Chapter 2.ppt
byShihab61
 
Introduction to Accountingch02
byRaed Felfel
 
JOURNALIZING.pptx
byMarcelVelasco1
 
vdocuments.mx_chapter-2-the-recording-process-accounting-principles-7-th-edit...
bymustafe44
 
notes for journal entries for undergraduate
bySathyaDinesh2
 
Chapter 2, Fundamentals of Accounting I (2).pptx
byKalkaye
 
Lecture # 04 (Recording Process) FA..pdf
byRehanIftikhar7
 
Chapter 2: The Recording Process
bytepsokha
 
Accounting cycle
byVishal Kukreja
 
Accounting Cycle - Journals - Capturing accounting event
byFaHaD .H. NooR
 
Chapter Two.pdf
bymohamedfaisal300400
 
Double_Entry_Accounting.ppt
byLuminaJulie1
 
Acc4201#2
byInternational Islamic University Chittagong
 
2.JOURNAL.ppt
byAcacollegeforCMA
 
Introduction of accounting- nency
byNency Parihar
 
ch02 The recording process kieso i guess.pptx
byRickySuhartono2
 
ch02-.pptx.accounting fundamental for recording
byponyking86
 
Process customerggggggggggsssssfkkkkkkkkkd
byandudereje249
 
J.pptx
byMarcelVelasco1
 

Recently uploaded

PDF
Gaming Quiz 2025- 27th October 2025, Quiz Club NITW
byQuiz Club NITW
 
PPTX
Cardiovascular System or The Details of Heart.pptx
byAshish Umale
 
PPTX
All Things 2025 - A Year in Review Quiz!
byShashank Jogani
 
PPTX
What are the Custom lot_serial number in Odoo 19
byCeline George
 
PPTX
Details Study of Joints (articulation).pptx
byAshish Umale
 
PPTX
Open to All Quiz Final Bagula Pathbhabana.pptx
bySourav Kr Podder
 
PDF
Teaching and Learning (BD1TL) - B.Ed TNTEU
byDr Raja Mohammed T
 
PPTX
Structure and function of Integumentary system (skin).pptx
byAshish Umale
 
PPTX
Haemolytic_Anaemia_UG_MBBS_Haemolysis_haemolysis
byDibyajyoti Prusty
 
PDF
Harmonising Tertiary Education through XR and AI: Innovative approach in the ...
byTorrens University Australia
 
PPT
Blood Grouping.ppt - Hematology -Physiology
bykishorkumar396
 
PDF
Digital_Empathy_Toolkit_Netiquette_and_Responsible_Communication
byNidhi Pandya
 
PDF
DNA.CEO: DNA-Computing For Kids, Teens, & Dummies (Like Me)
byVladislav Solodkiy
 
PDF
The Industrialisation of Deception: An Analysis of the 2024 Cybercrime Landscape
bykrutivyas2005
 
PPTX
L5 DRG Pulsed Radiofrequency ablation.pptx
bySandeep Margan
 
PPTX
Non aqueous titration First Year B. Pharm.pptx
byMs. Ashatai Patil
 
PDF
Life-Processes-in-Animals PPT/7TH CLASS NEW NCERT /CURIOSITY SCIENCE /BY K SA...
bySandeep Swamy
 
PPTX
Aplastic_Anaemia_PA17.1_Presentation.pptx
byDibyajyoti Prusty
 
PPTX
4. Nursery raising of vegetable crops.pptx
byUmeshTimilsina1
 
PPTX
Cultivation Practice of Chilli and sweet Pepper.pptx
byUmeshTimilsina1
 
Gaming Quiz 2025- 27th October 2025, Quiz Club NITW
byQuiz Club NITW
 
Cardiovascular System or The Details of Heart.pptx
byAshish Umale
 
All Things 2025 - A Year in Review Quiz!
byShashank Jogani
 
What are the Custom lot_serial number in Odoo 19
byCeline George
 
Details Study of Joints (articulation).pptx
byAshish Umale
 
Open to All Quiz Final Bagula Pathbhabana.pptx
bySourav Kr Podder
 
Teaching and Learning (BD1TL) - B.Ed TNTEU
byDr Raja Mohammed T
 
Structure and function of Integumentary system (skin).pptx
byAshish Umale
 
Haemolytic_Anaemia_UG_MBBS_Haemolysis_haemolysis
byDibyajyoti Prusty
 
Harmonising Tertiary Education through XR and AI: Innovative approach in the ...
byTorrens University Australia
 
Blood Grouping.ppt - Hematology -Physiology
bykishorkumar396
 
Digital_Empathy_Toolkit_Netiquette_and_Responsible_Communication
byNidhi Pandya
 
DNA.CEO: DNA-Computing For Kids, Teens, & Dummies (Like Me)
byVladislav Solodkiy
 
The Industrialisation of Deception: An Analysis of the 2024 Cybercrime Landscape
bykrutivyas2005
 
L5 DRG Pulsed Radiofrequency ablation.pptx
bySandeep Margan
 
Non aqueous titration First Year B. Pharm.pptx
byMs. Ashatai Patil
 
Life-Processes-in-Animals PPT/7TH CLASS NEW NCERT /CURIOSITY SCIENCE /BY K SA...
bySandeep Swamy
 
Aplastic_Anaemia_PA17.1_Presentation.pptx
byDibyajyoti Prusty
 
4. Nursery raising of vegetable crops.pptx
byUmeshTimilsina1
 
Cultivation Practice of Chilli and sweet Pepper.pptx
byUmeshTimilsina1
 

recording of transactions. pdf.pptx

  • 1.
  • 2.
    After studying thischapter, you should be able to: THE RECORDING PROCESS 1 Explain what an account is and how it helps in the recording process 2 Define debits and credits and explain how they are used to record business transactions 3 Identify the basic steps in the recording process 4 Explain what a journal is and how it helps in the recording process
  • 3.
    5 Explain whata ledger is and how it helps in the recording process 6 Explain what posting is and how it helps in the recording process 7 Prepare a trial balance and explain its purpose After studying this chapter, you should be able to: THE RECORDING PROCESS
  • 4.
    THE ACCOUNT STUDY OBJECTIVE1 • An account is an individual accounting record of increases and decreases in a specific asset, liability, or owner’s equity item. • There are separate accounts for the items we used in transactions such as cash, salaries expense, accounts payable, etc.
  • 5.
    BASIC FORM OFACCOUNT STUDY OBJECTIVE 2 • The simplest form an account consists of 1 the title of the account 2 a left or debit side 3 a right or credit side • The alignment of these parts resembles the letter T = T account Left or debit side Title of Account Right or credit side Debit balance Credit balance
  • 6.
    DEBITS AND CREDITS •Debit indicates left and Credit indicates right • Recording $ on the left side of an account is debiting the account • Recording $ on the right side is crediting the account • If the total of debit amounts is bigger than credits, the account has a debit balance • If the total of credit amounts is bigger than debits, the account has a credit balance
  • 7.
  • 8.
    Cash Debits Credits 15,000 Example: Theowner makes an initial investment of $15,000 to start the business. Cash is debited as the owner’s Capital is credited. DEBITING AN ACCOUNT
  • 9.
    Example: Monthly rentof $7,000 is paid. Cash is credited as Rent Expense is debited. CREDITING AN ACCOUNT Cash Debits Credits 7,000
  • 10.
    DEBITING / CREDITINGAN ACCOUNT Cash Debits Credits 15,000 7,000 8,000 Example: Cash is debited for $15,000 and credited for $7,000, leaving a debit balance of $8,000.
  • 11.
    DOUBLE-ENTRY SYSTEM • equaldebits and credits made accounts for each transaction • total debits always equal the total credits • accounting equation always stays in balance Assets Liabilities Equity
  • 12.
    DEBIT AND CREDITEFFECTS — ASSETS AND LIABILITIES Debits Credits Increase assets Decrease assets Decrease liabilities Increase liabilities
  • 13.
    NORMAL BALANCE • everyaccount has a designated normal balance. –It is either a debit or credit. • accounts rarely have an abnormal balance.
  • 14.
    NORMAL BALANCES —ASSETS AND LIABILITIES Assets Increase Decrease Debit Credit Decrease Increase Debit Credit Liabilities •Normal Balance Normal Balance
  • 15.
    DEBIT AND CREDITEFFECTS — OWNER’S CAPITAL Debits Credits Decrease owner’s capital Increase owner’s capital
  • 16.
    NORMAL BALANCE —OWNER’S CAPITAL Owner’s Capital Decrease Increase Debit Credit Normal Balance
  • 17.
    DEBIT AND CREDITEFFECTS — OWNER’S DRAWING Debits Credits Increase owner’s drawing Decrease owner’s drawing Remember, Drawing is a contra-account – an account that is backwards from the account it accompanies (the Capital account).
  • 18.
    NORMAL BALANCE —OWNER’S DRAWING Owner’s Drawing Normal Balance Increase Decrease Debit Credit
  • 19.
    DEBIT AND CREDITEFFECTS — REVENUES AND EXPENSES Decrease revenues Increase revenues Increase expenses Decrease expenses Debits Credits
  • 20.
    NORMAL BALANCES — REVENUESAND EXPENSES Increase Decrease Debit Credit Expenses Revenues Decrease Increase Debit Credit Normal Balance Normal Balance
  • 21.
    EXPANDED BASIC EQUATION ANDDEBIT/CREDIT RULES AND EFFECTS Liabilities Assets Owner’s Equity = + - + = + - Assets Dr. Cr. + - Liabilities Dr. Cr. - + Dr. Cr. Owner’s Drawing + - Dr. Cr. Revenues - + Dr. Cr. Expenses + - Dr. Cr. Owner’s Capital - +
  • 22.
    THE RECORDING PROCESS STUDY OBJECTIVE3 1 analyze each transaction (+, -) 2 enter transaction in a journal 3 transfer journal information to ledger accounts
  • 23.
    THE JOURNAL STUDY OBJECTIVE4 • Transactions – Are initially recorded in chronological order before they are transferred to the ledger accounts. • A general journal has 1 spaces for dates 2 account titles and explanations 3 references 4 two amount columns
  • 24.
    A journal makesseveral contributions to recording process: 1 discloses in one place the complete effect of a transaction 2 provides a chronological record of transactions 3 helps to prevent or locate errors as debit and credit amounts for each entry can be compared THE JOURNAL
  • 25.
    JOURNALIZING • Entering transactiondata in the journal is known as journalizing. • Separate journal entries are made for each transaction. • A complete entry consists of: 1 the date of the transaction, 2 the accounts and amounts to be debited and credited, 3 a brief explanation of transaction.
  • 26.
    TECHNIQUE OF JOURNALIZING The dateof the transaction is entered into the date column. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
  • 27.
    TECHNIQUE OF JOURNALIZING The debitaccount title is entered at the extreme left margin of the Account Titles and Explanation column. The credit account title is indented on the next line. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
  • 28.
    TECHNIQUE OF JOURNALIZING The amountsfor the debits are recorded in the Debit column and the amounts for the credits are recorded in the Credit column. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
  • 29.
    TECHNIQUE OF JOURNALIZING A briefexplanation of the transaction is given. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
  • 30.
    TECHNIQUE OF JOURNALIZING A spaceis left between journal entries. The blank space separates individual journal entries and makes the entire journal easier to read. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
  • 31.
    TECHNIQUE OF JOURNALIZING The columnentitled Ref. is left blank at the time journal entry is made and is used later when the journal entries are transferred to the ledger accounts. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 15,000 R. Neal, Capital 15,000 (Invested cash in business) 1 Computer Equipment 7,000 Cash 7,000 (Purchased equipment for cash)
  • 32.
    GENERAL JOURNAL J1 DateAccount Titles and Explanation Ref. Debit Credit 2005 July 1 Cash 20,000 K. Browne, Capital 20,000 (Invested cash in the business) If an entry involves only two accounts, one debit and one credit, it is considered a simple entry. SIMPLE AND COMPOUND JOURNAL ENTRIES
  • 33.
    When three ormore accounts are required in one journal entry, the entry is referred to as a compound entry. COMPOUND JOURNAL ENTRY 2 1 3 GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 July 1 Delivery Equipment 14,000 Cash 8,000 Accounts Payable 6,000 (Purchased truck for cash with balance on account)
  • 34.
    GENERAL JOURNAL J1 DateAccount Titles and Explanation Ref. Debit Credit 2005 July 1 Cash 8,000 Delivery Equipment 14,000 Accounts Payable 6,000 (Purchased truck for cash with balance on account) COMPOUND JOURNAL ENTRY This is the wrong format; all debits must be listed before the credits are listed.
  • 35.
    THE LEDGER STUDY OBJECTIVE5 A Group of accounts maintained by a company is called the ledger. A general ledger contains all the assets, liabilities, and owner’s equity accounts
  • 36.
    POSTING A JOURNALENTRY In the ledger, enter in the appropriate columns of the account(s) debited the date, journal page, and debit amount shown in the journal. GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 10 15,000 R. Neal, Capital 25 15,000 (invested cash in business) R. NEAL, CAPITAL NO. 25 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000 GENERAL LEDGER CASH NO. 10 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000
  • 37.
    POSTING A JOURNALENTRY R. NEAL, CAPITAL NO. 25 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000 GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 10 15,000 R. Neal, Capital 25 15,000 (invested cash in business) GENERAL LEDGER CASH NO. 10 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000 In the reference column of the journal, write the account number to which the debit amount was posted.
  • 38.
    POSTING A JOURNALENTRY In the ledger, enter in the appropriate columns of the account(s) credited the date, journal page, and credit amount shown in the journal. R. NEAL, CAPITAL NO. 25 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000 GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 10 15,000 R. Neal, Capital 25 15,000 (invested cash in business) GENERAL LEDGER CASH NO. 10 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000
  • 39.
    POSTING A JOURNALENTRY In the reference column of the journal, write the account number to which the credit amount was posted. R. NEAL, CAPITAL NO. 25 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000 GENERAL JOURNAL J1 Date Account Titles and Explanation Ref. Debit Credit 2005 Sept. 1 Cash 10 15,000 R. Neal, Capital 25 15,000 (invested cash in business) GENERAL LEDGER CASH NO. 10 Date Explanation Ref. Debit Credit Balance 2005 Sept. 1 J1 15,000 15,000
  • 40.
    A Chart ofAccounts lists the accounts and the account numbers which identify their location in the ledger. CHART OF ACCOUNTS
  • 41.
    INVESTMENT OF CASHBY OWNER Basic Analysis Debit-Credit Analysis Transaction October 1, C.R. Byrd invests $10,000 cash in an advertising business known as: The Pioneer Advertising Agency. •The asset Cash is increased $10,000 •Owner’s equity, C. R. Byrd, Capital is increased $10,000. Debits increase assets: debit Cash $10,000. Credits increase owner’s equity: credit C.R. Byrd, Capital $10,000.
  • 42.
    PURCHASE OF OFFICE EQUIPMENT C.R. Byrd, Capital 301 Oct. 1 10,000 Cash 101 Oct. 1 10,000 Date Account Titles and Explanation Ref. Debit Credit Oct. 1 Cash 101 10,000 C. R. Byrd, Capital 301 10,000 (Owner invests $10,000 In the business) JOURNAL ENTRY POSTING
  • 43.
    INVESTMENT OF CASHBY OWNER Basic Analysis Debit-Credit Analysis Transaction October 1, C. R. Byrd purchases $5,000 of equipment by issuing a 3-month, 12% note payable. •The asset Office Equipment is increased $5,000. •The liability, Notes Payable is increased $5,000. Debits increase assets: debit Office Equipment $5,000. Credits increase liabilities: credit Notes Payable $5,000.
  • 44.
    PURCHASE OF OFFICE EQUIPMENT NotesPayable 200 Oct. 1 5,000 Office Equipment 157 Oct. 1 5,000 Date Account Titles and Explanation Ref. Debit Credit Oct. 1 Office Equipment 157 5,000 Notes Payable 200 5,000 (Issued 3-month, 12% note for office equipment) JOURNAL ENTRY POSTING
  • 45.
    RECEIPT OF CASHFOR FUTURE SERVICE Basic Analysis Debit-Credit Analysis Transaction October 2, a $1,200 cash advance is received from a client, for advertising services expected to be completed by December 31. Asset Cash is increased $1,200 Liability Unearned Fees is increased $1,200 •Service has not been rendered yet. Liabilities often have the word “payable” in their title, Unearned fees are a liability. Debits increase assets: debit Cash $1,200. Credits increase liabilities: credit Unearned Fees $1,200.
  • 46.
    RECEIPT OF CASHFOR FUTURE SERVICE Unearned Fees 209 Oct. 2 1,200 Cash 101 Oct. 1 10,000 2 1,200 Date Account Titles and Explanation Ref. Debit Credit Oct. 2 Cash 101 1,200 Unearned Fees 209 1,200 (Received advance from R. Knox for future services) JOURNAL ENTRY POSTING
  • 47.
    PAYMENT OF MONTHLY RENT Basic Analysis Debit-Credit Analysis Transaction October3, office rent for October is paid in cash, $900. The expense Rent is increased $900 Payment pertains only to the current month Asset Cash is decreased $900. Debits increase expenses: debit Rent Expense $900. Credits decrease assets: credit Cash $900.
  • 48.
    PAYMENT OF RENT EXPENSE Cash101 Oct. 1 10,000 Oct. 3 900 Oct. 2 1,200 Rent Expense 729 Oct. 3 900 Date Account Titles and Explanation Ref. Debit Credit Oct. 3 Rent Expense 729 900 Cash 101 900 (Paid $900 for October rent) JOURNAL ENTRY POSTING
  • 49.
    PAYMENT FOR INSURANCE -AssetPrepaid Insurance increases $600 -Payment extends to more than the current month -Asset Cash is decreased $600. -Payments of expenses benefiting more than one period are prepaid expenses or prepayments. Transaction October 4, $600 Paid one-year insurance policy- expires next year on September 30. Debit-Credit Analysis Debits increase assets: debit Prepaid Insurance $600. Credits decrease assets: credit Cash $600. Basic Analysis
  • 50.
    PAYMENT FOR INSURANCE Cash 101 Oct.1 10,000 Oct. 3 900 2 1,200 4 600 Date Account Titles and Explanation Ref. Debit Credit Oct. 4 Prepaid Insurance 130 600 Cash 101 600 (Paid one-year policy; effective date October 1) JOURNAL ENTRY POSTING Prepaid Insurance 130 Oct. 4 600
  • 51.
    PURCHASE OF SUPPLIES ONCREDIT Basic Analysis Debit-Credit Analysis Transaction October 5, an estimated 3-month supply of advertising materials is purchased on account from Aero Supply for $2,500. The asset Advertising Supplies is increased $2,500; the liability Accounts Payable is increased $2,500. Debits increase assets: debit Advertising Supplies $2,500. Credits increase liabilities: credit Accounts Payable $2,500.
  • 52.
    PURCHASE OF SUPPLIES ONCREDIT Accounts Payable 201 Oct. 5 2,500 Advertising Supplies 126 Oct. 5 2,500 Date Account Titles and Explanation Ref. Debit Credit Oct. 5 Advertising Supplies 126 2,500 Accounts Payable 201 2,500 (Purchased supplies on account from Aero Supply) JOURNAL ENTRY POSTING
  • 53.
    HIRING OF EMPLOYEES Basic Analysis Debit-Credit Analysis Transaction October9, hire four employees to begin work on October 15. Each employee is to receive a weekly salary of $500 for a 5-day work week, payable every 2 weeks -- first payment made on October 26. A business transaction has not occurred only an agreement between the employer and the employees to enter into a business transaction beginning on October 15. A debit-credit analysis is not needed because there is no accounting entry.
  • 54.
    WITHDRAWAL OF CASHBY OWNER Basic Analysis Debit-Credit Analysis Transaction October 20, C. R. Byrd withdraws $500 cash for personal use. The owner’s equity account C. R. Byrd, Drawing is increased $500. The asset Cash is decreased $500. Debits increase drawings: debit C. R. Byrd, Drawing $500. Credits decrease assets: credit Cash $500.
  • 55.
    WITHDRAWAL OF CASHBY OWNER C. R. Byrd, Drawing 306 Oct. 20 500 Cash 101 Oct. 1 10,000 Oct. 3 900 2 1,200 4 600 20 500 Date Account Titles and Explanation Ref. Debit Credit Oct. 20 C. R. Byrd, Drawing 306 500 Cash 101 500 (Withdrew cash for personal use) JOURNAL ENTRY POSTING
  • 56.
    PAYMENT OF SALARIES Basic Analysis Debit-Credit Analysis Transaction October26, employee salaries of $4,000 are owed and paid in cash. (See October 9 transaction.) The expense account Salaries Expense is increased $4,000; the asset Cash is decreased $4,000. Debits increase expenses: debit Salaries Expense $4,000. Credits decrease assets: credit Cash $4,000.
  • 57.
    PAYMENT OF SALARIES DateAccount Titles and Explanation Ref. Debit Credit Oct. 26 Salaries Expense 726 4,000 Cash 101 4,000 (Paid salaries to date) Cash 101 Oct. 1 10,000 Oct. 3 900 2 1,200 4 600 20 500 26 4,000 JOURNAL ENTRY POSTING Salaries Expense 726 Oct. 26 4,000
  • 58.
    RECEIPT OF CASHFOR FEES EARNED Basic Analysis Debit-Credit Analysis Transaction October 31, received $10,000 in cash from Copa Company for advertising services rendered in October. The asset Cash is increased $10,000; the revenue Fees Earned is increased $10,000. Debits increase assets: debit Cash $10,000. Credits increase revenues: credit Fees Earned $10,000.
  • 59.
    RECEIPT OF CASHFOR FEES EARNED Cash 101 Oct. 1 10,000 Oct. 3 900 2 1,200 4 600 31 10,000 20 500 26 4,000 Date Account Titles and Explanation Ref. Debit Credit Oct. 31 Cash 101 10,000 Fees Earned 400 10,000 (Received cash for fees earned) Fees Earned 400 Oct. 31 10,000 JOURNAL ENTRY POSTING
  • 60.
    THE TRIAL BALANCE STUDYOBJECTIVE 7 • The trial balance is a list of accounts and their balances at a given time. • The primary purpose of a trial balance is to prove debits = credits after posting. • If debits and credits do not agree, the trial balance can be used to uncover errors in journalizing and posting.
  • 61.
    THE TRIAL BALANCE TheSteps in preparing the Trial Balance are: 1. List the account titles and balances 2. Total the debit and credit columns 3. Prove the equality of the two columns
  • 62.
    PIONEER ADVERTISING AGENCY TrialBalance October 31, 2005 Debit Credit Cash $ 15,200 Advertising Supplies 2,500 Prepaid Insurance 600 Office Equipment 5,000 Notes Payable $ 5,000 Accounts Payable 2,500 Unearned Fees 1,200 C. R. Byrd, Capital 10,000 C. R. Byrd, Drawing 500 Fees Earned 10,000 Salaries Expense 4,000 Rent Expense 900 $ 28,700 $ 28,700 The total debits must equal the total credits. A TRIAL BALANCE
  • 63.
    LIMITATIONS OF A TRIALBALANCE • A trial balance does not prove all transactions have been recorded or the ledger is correct. • Numerous errors may exist even though the trial balance columns agree. For example, the trial balance may balance even when: – a transaction is not journalized – a correct journal entry is not posted – a journal entry is posted twice – incorrect accounts used in journalizing or posting – offsetting errors are made in recording
  • 64.
    Chapter 2 Which oneof the following represents the expanded basic accounting equation? a. Assets = Liabilities + Owner’s Capital + Owner’s Drawings – Revenue - Expenses. b. Assets + Owner’s Drawings + Expenses = Liabilities + Owner’s Capital + Revenue. c. Assets – Liabilities – Owner’s Drawings = Owner’s Capital + Revenue – Expenses. d. Assets = Revenue + Expenses – Liabilities.
  • 65.
    Chapter 2 Which oneof the following represents the expanded basic accounting equation? a. Assets = Liabilities + Owner’s Capital + Owner’s Drawings – Revenue - Expenses. b. Assets + Owner’s Drawings + Expenses = Liabilities + Owner’s Capital + Revenue. c. Assets – Liabilities – Owner’s Drawings = Owner’s Capital + Revenue – Expenses. d. Assets = Revenue + Expenses – Liabilities.