LUABILITIES NEY WORTH Sleft handele and the chang. in the liab ity nemlor "et wonh) On-ng-hand Note that Party A, B and C can be anybody. It can be your u Students very often do not understand the following fundamenital point The t-account MUST BALANCE This is in one asset item (say X in the second item (Y), or by an equal increase BE TRUE BECALISE THE BASIC ACCOUNTING from the FINANCE theacattutionofthitasset Tho word in capital letters in the previous uenteren is ake the ayet mona you are majoring in. This iWustrates that you l concept if you want to understand net worth is defined. Another MUST understand this fundamental Please take a few minutes to diagram each of the following transactions, using .tmunttor parties: a) You buy a $200,000 house with cash. b) You buy a $200,000 house with $20,000 in cash and raise the balance c) You give $100 to a friend in need d) A bank makes a $1,000 loan using cash that has been accumulated e) A bank takes in a $1 million dollar deposit and simultaneously makes a one million dollar loan. f) A bank pays off a $S miltion deposit by borrowing from the Federal Reserve. g) The Federal Reserve buys $1 million in securities by printing one million in Federal Reserve notes with a mortgage. h) The Federal Reserve buys $5 million in securities from a wealthy individual who deposits the check in his account at a bank each party that is affected by the transaction. We will take a few minutes toward the end of class net week to go over each of these. Again, put the answers in the notebook where you record the answers to your end of chapter questions. Th Be sure to show the amounts and make sure that they balance. Also, there should be a T-account for LUABILITIES NEY WORTH Sleft handele and the chang. in the liab ity nemlor "et wonh) On-ng-hand Note that Party A, B and C can be anybody. It can be your u Students very often do not understand the following fundamenital point The t-account MUST BALANCE This is in one asset item (say X in the second item (Y), or by an equal increase BE TRUE BECALISE THE BASIC ACCOUNTING from the FINANCE theacattutionofthitasset Tho word in capital letters in the previous uenteren is ake the ayet mona you are majoring in. This iWustrates that you l concept if you want to understand net worth is defined. Another MUST understand this fundamental Please take a few minutes to diagram each of the following transactions, using .tmunttor parties: a) You buy a $200,000 house with cash. b) You buy a $200,000 house with $20,000 in cash and raise the balance c) You give $100 to a friend in need d) A bank makes a $1,000 loan using cash that has been accumulated e) A bank takes in a $1 million dollar deposit and simultaneously makes a one million dollar loan. f) A bank pays off a $S miltion deposit by borrowing from the Federal Reserve. g) The Federal Reserve buys $1 million in securities by printing one million in Federal Reserve notes with a mortgage. h) The Federal Reserve buys $5 million in securities from a wealthy individual who deposits the check in his account at a bank each party that is affected by the transaction. We will take a few minutes toward the end of class net week to go over each of these. Again, put the answers in the notebook where you record the answers to your end of chapter questions. Th Be sure to show the amounts and make sure that they balance. Also, there should be a T-account for
