Accounting Lecture 02 Part 1 - Recording Transactions

Recording basic transactions in an accounting system. Concepts and procedures pertaining to the accounts that are used in recording transactions and in preparing the financial statements. Part 1 of 2 parts.

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[7ifrah]

I didn't understand the last transaction completely.

In F-4-a Fred purchases equipment, paying $2,000 of BUSINESS CASH to obtain it. Why didn't you put the BUSINESS CASH entry in owners equity instead of cash of assets? While in transaction E-1 Fred takes $1,000 of cash out of the BUSINESS to use for vacation trip.

=Continue in the next comment=>

[AccountingTutor]

@7ifrah

In this case, the cash was already in the business. As explained in the video, Fred's equity in the business changes only when Fred places a NEW asset n the business (an owner contribution) or takes an existing asset out of the business (a withdrawal). Neither of these things happened in the transaction.

[4starleague]

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[liquidfirez]

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[Tinfoilstar2]

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[7ifrah]

=========>>>

- Mathematically I can understand it that subtracting $2,000 from cash (in assets) we need to add equal amount of $2,000 in the same side in order to balance the amount on the both sides.

- I didn't understand that why one entry is put in cash (assets) and other in owner's equity in the last transaction? Fred had taken cash out both times from BUSINESS.

[kinkerbots]

@4starleague That's hilariously accurate!

[kinkerbots]

I was reading a textbook to learn accounting and was confused from the beginning- and I'm an honor student! I've gotten through your First Lecture and part 1 of the Second Lecture, and I can say accounting is easy! It's common sense, really. Thank you!

[awkwardjazz]

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[crambeats]

@4starleague I know right? I'm like $25k in debt from college and they didn't teach me anything that I could not have learned online or out of a book on my own.

[makeiteasyable]

ty

[01hadassah1]

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