The Transaction analysis sheet. - Weebly

[Pages:18]The Transaction

Analysis Sheet

The Transaction Analysis Sheet

The goal of this section is to learn how various transactions can affect and change the financial position of a company.

One of the ways that transactions can be examined is by using a "Transaction Analysis Sheet".

It is vital that you remember the fundamental accounting equation: A = L + OE (Assets = Liabilities + Owner's Equity)

when completing the Transaction Analysis Sheet.

The Transaction Analysis Sheet

First let's look at a simplified Balance Sheet for ABC Bike Cabs. The Balance sheet is needed to gain the beginning balances for each account.

The Transaction Analysis Sheet

? As transactions occur, the balances of some or all of the accounts in

the Balance Sheet can be affected.

? A transaction analysis sheet should be used when studying and

recording changes in a business's financial position. This sheet is built in the same way as the fundamental accounting equation.

A =

L +

OE

The Transaction Analysis Sheet

Here are some transactions that affect the financial position of ABC Bike Cabs:

Transaction 1: ABC Bike Cabs pays $100 cash to Joe's Bike Repair (creditor).

?The amounts for Cash and Accounts Payable are updated: ?Cash is decreased by $100. ?Debt owed to Joe's Bike Repair is decreased by $100.

?The amounts for the other items remain unchanged.

After the changes are recorded and the new totals determined, the equation is still in balance. This is very important!

The Transaction Analysis Sheet

Transaction Analysis Sheet after Transaction 1:

The Transaction Analysis Sheet

Transaction 2: The Belair Hotel, who owes ABC Bike Cabs $50.00, pays $25.00 in partial payment of its debt.

? Cash is increased by the amount received: $25.00. ? Accounts Receivable - Belair Hotel is decreased by $25.00 but

$25.00 is still owing on the debt.

After the changes are recorded, the equation is still in balance.

The Transaction Analysis Sheet

After Transaction 2, the Transaction Analysis Sheet will look as follows:

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