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    Accounting Equation, Transaction Analysis and Preparation of Financial Statement

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    শুভ Mitra
    The document discusses accounting concepts including the accounting equation, components of the equation, and how transactions affect the equation. It provides examples of 10 transactions for a computer programming business called Softbyte. The transactions include investing cash in the business, purchasing assets, receiving cash from customers, paying expenses, and withdrawing cash. The document instructs the reader to prepare a tabular summary or accounting schedule showing the impact of the transactions on the accounting equation, as well as an income statement, statement of owner's equity, and balance sheet as of September 30, 2010.

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    Accounting Equation, Transaction Analysis and Preparation of Financial Statement

    Uploaded by

    শুভ Mitra
    33 views10 pages
    The document discusses accounting concepts including the accounting equation, components of the equation, and how transactions affect the equation. It provides examples of 10 transactions for a computer programming business called Softbyte. The transactions include investing cash in the business, purchasing assets, receiving cash from customers, paying expenses, and withdrawing cash. The document instructs the reader to prepare a tabular summary or accounting schedule showing the impact of the transactions on the accounting equation, as well as an income statement, statement of owner's equity, and balance sheet as of September 30, 2010.

    Original Description:

    Chapter 2

    Original Title

    Chapter 2

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    The document discusses accounting concepts including the accounting equation, components of the equation, and how transactions affect the equation. It provides examples of 10 transactions for a computer programming business called Softbyte. The transactions include investing cash in the business, purchasing assets, receiving cash from customers, paying expenses, and withdrawing cash. The document instructs the reader to prepare a tabular summary or accounting schedule showing the impact of the transactions on the accounting equation, as well as an income statement, statement of owner's equity, and balance sheet as of September 30, 2010.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    33 views10 pages

    Accounting Equation, Transaction Analysis and Preparation of Financial Statement

    Uploaded by

    শুভ Mitra
    The document discusses accounting concepts including the accounting equation, components of the equation, and how transactions affect the equation. It provides examples of 10 transactions for a computer programming business called Softbyte. The transactions include investing cash in the business, purchasing assets, receiving cash from customers, paying expenses, and withdrawing cash. The document instructs the reader to prepare a tabular summary or accounting schedule showing the impact of the transactions on the accounting equation, as well as an income statement, statement of owner's equity, and balance sheet as of September 30, 2010.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    Chapter 2

    Accounting Equation,
    Transaction Analysis and
    Preparation of Financial
    Statement
    Weygandt Kimmel Keiso
    9th Edition)

    Basic Accounting Equation


    Asset = Liabilities + Owners Equity
    A
    = L
    + OE

    Components of Accounting
    Equation
    1) Asset:
    Resources owned by a business.
    Used in carrying out activities such as
    production.
    Capacity to provide future benefit.

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

    Increase and Decrease of Owners


    Equity

    Owners Equity

    Investment by owner
    Revenues

    Withdrawal by owner
    Expenses

    Transaction
    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.

    Transaction Analysis
    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.

    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.

    7. Softbyte pats 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. 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.

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