Changes Affecting Owner's Equity

14 terms by MadelineHarris 

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Goes through terms and theory about how certain transactions change the owner's equity part of the accounting equation

Revenue

increase in owner's equity through business activities

Expense

decrease in owner's equity through business operations

Withdrawal

assets taken for owner's personal use (drawing)

Received cash as investment

Debit cash Credit owner's equity (capital)

Received cash from sales

Debit cash Credit owner's equity (sales)

Accounting equation

Assets = Liabilities + Owner's Equity

Four accounts affecting owner's equity

Revenue, expense, drawing, and capital

Four expense transactions besides rent & utilities

Advertising, equipment repairs, charitable contributions, miscellaneous

Paid cash for advertising expense

Credit cash Debit owner's equity (expense)

Paid cash to owner for personal use

Credit cash Debit owner's equity (drawing)

How does "received cash from sales" affect accounting equation?

Asset increases Owner's equity increases

How does "paid cash for expense" affect accounting equation?

Asset decreases Owner's equity decreases

How does "received cash from sales" affect accounting equation?

Asset increases Owner's equity increases

How does "paid cash to owner for personal use" affect accounting equation?

Asset decreases Owner's equity decreases

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