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Study Smarter.....Study The Answers!

Record Balance Sheet Transactions on a Spreadsheet

1) Key Things To Know 4) Easy Practice Test
2) Self Test 5) Medium Practice Test
3) Practice as You Learn 6) Quick Study Sheet

 

 

Key Things to Know

Transaction:  An exchange of something for something else. 
 
Common Transactions:
 
     You get something and you give something to get it.
 
                You get an asset now and give up an asset now
                You get an asset now and give up a liability (pay later)
 
     Repay a liability – pay cash for what you owe so you don’t owe anymore
 
 
When recording transactions:
 
            1) determine what you received and the account name used for that
 
            2) determine what you gave up and the account name used for that
 
 
Common account names used:
 
Assets are – What you have                              Liabilities are – What you owe
 
            Assets                                                                        Liabilities
 
            Cash                                                                       Accounts payable
            Accounts receivable                                                Accrued expenses
            Inventory                                                                 Accrued liabilities
            Prepaid expense – insurance, rent                         Short term notes payable
            Short term investments                                           Rent payable
            Short term notes receivable                                    Salaries payable
            Supplies                                                                  Interest payable
            Long term investments                                           Taxes payable
            Long term notes receivable                                    Unearned revenues
            Land                                                                        Long term debt
            Buildings                                                                  Long term notes payable
            Equipment                                                               
            Autos                                                                          Owner’s Equity:
            Computer equipment                                             
            Goodwill                                                                    Common stock
            Trademarks                                                              Contributed capital
            Copyrights                                                                Retained Earnings
            Patents                                                                     Treasury Stock
 
 
There are 5 general transactions that occur over and over that impact the balance sheet –
   what you have, what you owe and owner’s equity. 
 
            5 common things that happen repeatedly:
 
            1)  Receive cash from investors
            2)  Trade an asset for another asset
            3)  Buy an asset and pay cash
            4)  Buy an asset and incur a liability – you will pay later
            5)  Pay cash to reduce what is owed – reduce a liability
           
 
            Once you have identified the kind of transaction that has occurred you must
             name the account’s that are changed by the transaction . 
 
 
 
As you determine what happened in the transactions, write the account name
  that is involved in the transaction at the top of a column and put a  positive number if it 
  increases and a negative number if it decreases in the column below the account name:
 
            Example:  3 transactions occurred:
 
                        1)  The company issued stock to investors for $100,000
                        2)  The company purchased inventory on account in the amount of $12,000
                        3)  The company purchased furniture for cash in the amount of $10,000.
 

 
 
Accounts
Common
 
Cash
Inventory
Furniture
=
Payable +
Stock
1)
$100,000
=
$100,000
2)
$12,000
=
$12,000
3)
($10,000)
$10,000
=
 
_____
_____
_____
_____
_____
 
$90,000
$12,000
$10,000
=
$12,000
$100,000

 

As you record transactions you must keep the accounting equation balanced
          .Assets = Liabilities + Owner’s Equity
 
            If you put an amount on the asset side, you must put the same
              amount on the liability + owner’s equity side or you must reduce another
              asset by the same amount.
           
                       
 
You will have columns with each account name across the top
 
In the columns will be the amount of the transaction, positive or negative
 
At the end of the period, total each column 
 
The total amount in each asset account is the amount the company has of that asset
The total amount in each liability account is the amount the company owes for that liability.
 
Stockholder’s Equity (for now, until we discuss the income statement transactions) will
   only be cash received from owners in the capital / common stock / contributed
   capital account or purchase of your own stock called treasury stock
 


 

 

 

 
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