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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Describe the chart of accounts.
Explain the purpose of double-entry accounting.
Use T accounts to analyze transactions that affect assets, liabilities,
and the owners capital account.
Prepare a chart of accounts.
Identify the normal balance of accounts.
Use T accounts to illustrate the rules of debit and credit.
Calculate the account balances after recording business transactions.
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Accounts and the Double-
Section 4.1
Entry Accounting System
Key Terms
chart of accounts
ledger
double-entry accounting
debit
credit
T account
normal balance
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
The Chart of Accounts
Accounts and the Double-
Section 4.1
Entry Accounting System
chart of accounts
A list of all accounts used by a business.
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
The Chart of Accounts
Accounts and the Double-
Section 4.1
Entry Accounting System
ledger
A group of accounts; also referred to as a
general ledger.
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
The Chart of Accounts
Accounts and the Double-
Section 4.1
Entry Accounting System
See page 82
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Double-Entry Accounting
Accounts and the Double-
Section 4.1
Entry Accounting System
double-entry accounting
A system used to analyze and record
a transaction.
debit
An entry on the left side of an account.
credit
An entry on the right side of an account.
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Double-Entry Accounting
Accounts and the Double-
Section 4.1
Entry Accounting System
T-account
A visual representation of a ledger
account. The T account is a tool used to
analyze transactions.
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Double-Entry Accounting
Accounts and the Double-
Section 4.1
Entry Accounting System
normal balance
The increase side of an account.
The word normal here means usual.
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Double-Entry Accounting
Accounts and the Double-
Section 4.1
Entry Accounting System
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Double-Entry Accounting
Accounts and the Double-
Section 4.1
Entry Accounting System
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Business Transaction
Analysis
Applying the Rules of
Section 4.2
Debit and Credit
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Assets and Equities
Transactions
Applying the Rules of
Section 4.2
Debit and Credit
See page 87
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Assets and Equities
Transactions
Applying the Rules of
Section 4.2
Debit and Credit
On October 2 Crista Vargas took two telephones valued at $200 each from her
home and transferred them to the business as office equipment.
See page 87
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Assets and Equities
Transactions
Applying the Rules of
Section 4.2
Debit and Credit
On October 4 Zip issued Check 101 for $3,000 to buy a computer system.
See page 88
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Assets and Equities
Transactions
Applying the Rules of
Section 4.2
Debit and Credit
On October 9 Zip bought a used truck on account from Coast to Coast Auto
for $12,000.
See page 89
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Assets and Equities
Transactions
Applying the Rules of
Section 4.2
Debit and Credit
On October 11 Zip sold one phone on account to Green Company for $200.
See page 89
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Assets and Equities
Transactions
Applying the Rules of
Section 4.2
Debit and Credit
On October 12 Zip mailed Check 102 for $350 as the first installment on the
truck purchased from Coast to Coast Auto on October 9.
See page 90
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Assets and Equities
Transactions
Applying the Rules of
Section 4.2
Debit and Credit
On October 14 Zip received and deposited a check for $200 from Green
Company. The check is full payment for the telephone sold on account to Green
Company on October 11.
See page 90
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Question 1
Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Question 2
(continued)
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Question 2
(continued)
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Question 2
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
Question 3
Every transaction has two sides: a debit (left) side and a credit (right)
side. If a business were to buy supplies for cash, two things would
happen. First, the amount of supplies would go up, and since supplies
are assets, the increase to the Supplies account would be recorded as
a debit. Second, the balance in the Cash in Bank account would go
down, and since cash is an asset, the decrease in Cash in Bank would
be recorded as a credit.
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Glencoe Accounting Copyright by The McGraw-Hill Companies, Inc. All rights reserved.
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