A transaction is any activity that changes the value of a firm’s assets, liabilities, or owner’s equity. Each transaction has a dual effect
on the basic accounting elements. A transaction may affect more than two accounts in a transaction. This is called a combined entry.
Withdrawal (Drawing)
is the removal of business assets for personal use by the owner. This transaction decreases the asset taken and the value of the business. Each transaction increases or decreases (or both) the basic elements in the accounting equation. The effect of recording a business transaction must always leave the two sides of the accounting equation in balance. To understand how a transaction affects the accounting equation, go through each of the examples in the textbook. Be sure to pay attention to the ““Notes” and “Cautions” that are given.
on the basic accounting elements. A transaction may affect more than two accounts in a transaction. This is called a combined entry.
Withdrawal (Drawing)
is the removal of business assets for personal use by the owner. This transaction decreases the asset taken and the value of the business. Each transaction increases or decreases (or both) the basic elements in the accounting equation. The effect of recording a business transaction must always leave the two sides of the accounting equation in balance. To understand how a transaction affects the accounting equation, go through each of the examples in the textbook. Be sure to pay attention to the ““Notes” and “Cautions” that are given.
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