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Lecture 7

ACCT-311 Lecture Notes - Lecture 7: Accounting Equation, Accounting Software


Department
Accounting
Course Code
ACCT-311
Professor
A N O N Y M O U S
Lecture
7

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Sample Transactions #2 -
#3
Sample Transaction #2
Marilyn illustrates for Joe a second transaction. On December 2,
Direct Delivery purchases a used delivery van for $14,000 by writing
a check for $14,000. The two accounts involved are Cash and
Vehicles (or Delivery Equipment). When the check is written, the
accounting software will automatically make the entry into these two
accounts.
Marilyn explains to Joe what is happening within the software. Since
the company pays $14,000, the Cash account is credited.
(Accountants consider the checking account to be Cash, and the TIP
you learned is that when cash is paid, you credit Cash.) So we know
that the Cash account will be credited for $14,000 and we know the
other account will have to be debited for $14,000. We need only
identify the best account to debit. In this case we choose Vehicles (or
Delivery Equipment) and the entry is:
The balance sheet will look like this after the vehicle transaction is
recorded:
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