Accounting I
Guided Reading
Chapter 1	Starting A Proprietorship:  Changes that Affect the Accounting Equation

1-1 The Accounting Equation
What Is Accounting?

Accounting System:

Accounting Records:

Financial Statements:

Understanding _________________________ helps owners and managers make better decisions regarding their company.
The Business—TechKnow Consulting
Give two examples of service business: 

Proprietorship: 

Accounting concept!!!
Business Entity: 

Describe the advantages and disadvantages of a proprietorship:

The Accounting Equation is stated as: ___________________________________________________
An Asset is _____________________________________________________ and an example would be _________________________________.
Equities is defined as _____________________________________________________ and the two types for a business are ________________________________________ and __________________ _________________________________________.
A Liability is _____________________________________________________ and an example would be _________________________________.
Owner’s Equity is ___________________________________________________________________.
Ethics is ________________________________________________________________________________ and Business Ethics is ____________________________________________________________________________.
1-2 How Business Activities Change the Accounting Equation
Receiving Cash
Transaction is _______________________________________________________________________ and an example would be  ________________________________________________________________________.
Accounting concept!!!
Unit of Measurement: 

An account is defined as _______________________________________________________________ and an example is __________________________________________________________________________________.
	Account title is ______________________________________________________________________________.
	Account Balance is ___________________________________________________________________________.
	Capital is ___________________________________________________________________________________.
	What two accounts are affected with transaction 1? ____________________ and ________________________.
	What must be done if a transaction increases the left side of the accounting equation?

Paying Cash
	What two accounts are affected with transaction 2? ____________________ and ________________________.
	What two accounts are affected with transaction 3? ____________________ and ________________________.
	How can a transaction affect only one side of the accounting equation?

Transactions on Account
What two accounts are affected with transaction 4? ____________________ and ________________________.
	What two accounts are affected with transaction 5? ____________________ and ________________________.
	To what does the phrase on account refer?

1-3 How Transactions Change Owner’s Equity in an Accounting Equation
	Revenue Transactions
		Revenue refers to _________________________________________________________________________. 
		What two accounts are affected with transaction 6? ____________________ and _____________________	
		How is owner’s equity affected when cash is received from sales?

		Sales on account means ____________________________________________________________________.	
		What two accounts are affected with transaction 7? ____________________ and _____________________	
		How is owner’s equity affected when services are sold on account?

	Expense Transactions
		An expense is ___________________________________________________________________________
		What two accounts are affected with transaction 8? ____________________ and _____________________	
		What two accounts are affected with transaction 9? ____________________ and _____________________	
		How is owner’s equity affected when cash is paid for an expense?

	Other Cash Transactions
		What two accounts are affected with transaction 10? ____________________ and _____________________	
		Withdraw:

		What two accounts are affected with transaction 11? ____________________ and _____________________	
		What does the summary of changes in Owner’s Equity show?