# Patchogue-Medford High School

Accounting I – Chapter 4 Notes

Mr. Butzke

Chapter 4 – Transactions that affect Assets, Liabilities, & O/E                                                                                                                           Page 78

Objective: Students will be able to demonstrate their knowledge of the rules for debits and credits and apply them to accounts using T-Accounts.  They will calculate account balances and analyze transactions and their affects on the accounting equation using T-Accounts to determine increases and decreases.

Ledger – Where accounts are maintained and grouped by category. They are listed in numeric order. Terms associated with it are “keeping the books”, “two sets of books”.

The ledger is organized using a chart of accounts.

Chart of Accounts – A numeric listing of all the accounts available to use in chronological order. (pages 81 & 82)

Assets begin with 1

Liabilities begin with 2

Equity begins with 3

Revenue begins with 4

COGS begins with 5

Expenses begin with 6 & 7

All transactions affect at least two accounts. This is called a Double Entry system.

In a double entry system you must have at least one debit and one credit amount. The entry must always be in balance, Dr = Cr.

T account rules (page 82)

It is used for recording transaction and analysis

It looks like a “T”.

The account title goes on the top

The left side is ALWAYS the Debit side, the right side is ALWAYS the Credit side

Debit and Credit Rules (page 83 & 84)

Increase      Decrease     Natural Balance

Asset              Dr.                      Cr.                  Dr.

Liability           Cr.              Dr.                          Cr.

Equity

Capital         Cr.              Dr.                          Cr.

Withdrawal  Dr.                      Cr.                  Dr.

Revenue          Cr.              Dr.                          Cr.

Expense          Dr.                      Cr.                  Dr.

(Problem 4-1, Applying the rules, pg 85, work book pg 34)

Review the transactions on pages 86-90. These show how transactions are recorded into T-Accounts and how balances are calculated.

Terms Page 93

Questions Page 94

Problems

Prob.  4-3             Identify Accts affected by trans TB pg 96     WB pg 35

Prob.  4-4             Using T-Accts to analyze trans TB pg 97     WB pg 35

Prob.  4-5             Analyze trans with Dr. & Cr.    TB pg 98     WB pg 36

Prob.  4-6             Analyze transactions                TB pg 99     WB pg 37   PC pg 39-40

Prob.  4-7             Analyze transactions                TB pg 100    WB pg 38