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Analyzing Transactions

Principles of Accounting. Analyzing Transactions. Practice Session #1. By Laurie L. Swanson. Analyzing a Transaction. Recall the three questions you should ask when analyzing transactions. What accounts are involved in the transaction? What is the classification of each account?

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Analyzing Transactions

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  1. PrinciplesofAccounting Analyzing Transactions Practice Session #1 By Laurie L. Swanson

  2. Analyzing a Transaction Recall the three questions you should ask when analyzing transactions. • What accounts are involved in the transaction? • What is the classification of each account? • What is happening to each account—is it increasing or decreasing?

  3. Analyzing a Transaction Remember also that most transactions contain clues that help you identify the accounts involved in the transaction. Further recall that each transaction will involve at least two different accounts.

  4. Transaction Analysis Sheet Use the Transaction Analysis Sheet to help you analyze the following transactions. Do not worry at this time about the order of your answers on the Transaction Analysis Sheet. These transactions continue to use Jones Career Consulting. Be sure to view this presentation as a Slide Show for the interaction to work properly.

  5. Transaction Analysis Sheet 1. Provided $250 in services for a customer on account. Accounts Receivable Asset Increasing ConsultingIncome Revenue Increasing

  6. Transaction Analysis Sheet 2. Paid employees salaries totaling $3,000. Salaries Expense Expense Increasing Cash Asset Decreasing

  7. Transaction Analysis Sheet 3. Purchased office equipment on account, $1,200. Office Equipment Asset Increasing Accounts Payable Liability Increasing

  8. Transaction Analysis Sheet 4. Received payment from a customer for services previously rendered. Cash Asset Increasing Accounts Receivable Asset Decreasing

  9. Transaction Analysis Sheet 5. Karen Jones, the owner, withdrew $1,000 for personal use. Cash Asset Decreasing Karen Jones, Drawing Owner’s Equity Increasing

  10. Transaction Analysis Sheet 6. Paid $350 for advertising. Cash Asset Decreasing Advertising Expense Expense Increasing

  11. Transaction Analysis Sheet 7. Performed $225 in services for a customer who paid cash. Cash Asset Increasing Consulting Income Revenue Increasing

  12. Transaction Analysis Sheet 8. Karen placed a personal computer with a market value of $800 into service for her business. Computer Asset Increasing Karen Jones, Capital Owner’s Equity Increasing

  13. Transaction Analysis Sheet 9. Paid the $1,200 owed for previously purchased office equipment. Accounts Payable Liability Decreasing Cash Asset Decreasing

  14. This Concludes Analyzing Transactions Practice Session #1

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