Chapter 2
Linking Personal Accounting to Business Accounting
44
Record the transaction in the T-accounts
CASH
RENT EXPENSE
INTEREST EXPENSE
SALARIES EXPENSE
+
+
+
+
-
-
-
-
1,100
6,000
200
1,100
200
6,000
Analyze the impact on the accounting equation
Assets = Liabilities + Owner’s Equity
- 1,100
- 6,000
- 200
- 1,100
- 6,000
- 200
*Explanation of changes to Owner’s Equity
Rent expense
Salaries expense
Interest expense
Explanation*
______________
FIGURE 2.24
Transactions 11 and 12: Incurred expenses to be paid later
The telephone expense is due to be paid next month and travel expenses were billed to a credit card
that is also to be paid next month.These expenses must be recorded this month because they were
incurred and used to generate sales this month. In other words, expenses incurred are matched to
revenue earned in the same period.This transaction is recorded by increasing accounts payable and
increasing the appropriate expense account, as illustrated in Figure 2.25. Remember, the equity in
the business decreases and is recorded as an increase to expenses.
Record the transaction in the T-accounts
ACCOUNTS PAYABLE
TELEPHONE EXPENSE
TRAVEL EXPENSE
-
+
+
+
-
-
300
2,000
300
2,000
Analyze the impact on the accounting equation
Assets = Liabilities + Owner’s Equity
- 300
- 2,000
+ 300
+ 2,000
*Explanation of changes to Owner’s Equity
Telephone expense
Travel expense
Explanation*
______________
FIGURE 2.25
