<p> Accounting Equation Transaction Analysis Framework</p><p>Assets = Liabilities + Equity Transaction Typical Accounting Entry + + Investment by owner Dr. Cash, Cr. Owner, Capital</p><p>+/- Acquires assets for use in business; Dr. Supplies, Cr. Cash pays cash</p><p>+ + Acquires assets for use in business; Dr. Supplies, Cr. Accounts purchase “on account” Payable</p><p>- - Cash paid to creditors for account Dr. Accounts Payable, Cr. Cash purchases </p><p>+ + Revenue recognized; cash received Dr. Cash, Cr. Fees Earned from customer</p><p>+ + Revenue recognized; sale “on Dr. Accounts Receivable, Cr. account”, i.e. customer will pay later Fees Earned</p><p>+/- Cash is collected from account Dr. Cash, Cr. Accounts customer Receivable</p><p>- - Expenses incurred; cash paid to Dr. Utilities Expense, Cr. Cash supplier, employee, etc.</p><p>+ - Expenses incurred “on account”; will Dr. Utilities Expense, Cr. pay supplier, employee, etc. later Accounts Payable Accounting Equation Transaction Analysis Framework (cont.)</p><p>Assets = Liabilities + Equity Transaction Typical Accounting Entry - - Cash is paid to account creditors, e.g. Dr. Accounts Payable, Cr. Cash suppliers, employees, etc. </p><p>+ + Cash received in advance for service to Dr. Cash, Cr. Unearned Revenue be rendered in future</p><p>- - Owner withdraws cash from business Dr. Owner, Drawing, Cr. Cash</p><p>ADJUSTING ENTRIES (end of period) - - Record depreciation of fixed assets Dr. Depreciation Expense, Cr. (deferred expense) Accumulated Depreciation</p><p>- - Assets used up over time or through Dr. Supplies Expense, Cr. operation of business (deferred expense) Supplies</p><p>- + Revenue recognized as service is Dr. Unearned Revenue, Cr. Cash performed for customers who paid in advance (deferred revenue) </p><p>+ + Revenue recognized for services Dr. Accounts Receivable, Cr. provided but unbilled as of end of period Fees Earned (accrued revenue)</p><p>+ - Recognition of expenses incurred but Dr. Wages Expense, Cr. Wages unpaid as of end of period (accrued Payable expense)</p><p>CLOSING ENTRIES (end of period) No effect No effect No effect Temporary accounts closed Four steps </p>