Understanding the Business Transaction

An economic event that changes an entity's financial condition or results of operations is a - Select your answer -accounting equationbusiness transactioncost conceptfinancial measureCorrect 1 of Item 3 . All business transactions can be stated in the terms of changes in the elements of the accounting equation. The accounting reports that summarize business transactions are called - Select your answer -accounting equationbusiness reportsfinancial statementssummary reportsCorrect 2 of Item 3 .

On November 1, 2014 Denise Clayton starts her own interior design business that will be known as Denise Designs. Denise Designs enters into the following business transactions in November:

Nov. 2	Denise Clayton deposits $7,800 of personal funds into the checking account of Denise Designs, her new business. Denise Designs is an example of a - Select your answer -corporationpartnershipsole proprietorshipCorrect 3 of Item 3 . The money deposited into the business checking account is now separate from Denise Clayton's personal funds. This is an example of the - Select your answer -business entityobjectivityunit of measureCorrect 4 of Item 3 concept.
Nov. 4	Denise Design purchases supplies from a supplier for $850, agreeing to pay the supplier in the future. An agreement to pay a supplier in the future is called an - Select your answer -accounts payableaccounts receivableprepaid expenseCorrect 5 of Item 3 . Items, like supplies, that will be used in the business in the future are called - Select your answer -accounts receivableprepaid expensessupplies expenseCorrect 6 of Item 3 and are assets.
Nov. 24	Denise Designs makes a partial payment of $470 to the supplier owed from the purchase on Nov. 4. Businesses will often purchase "on account" and then pay their bills at a later date. This is not much different than an individual charging goods and services and later paying for these items when their credit card statement is due.
Nov. 30	Denise Clayton determines that the cost of supplies on hand at the end of the month is $310. The difference between the original purchase amount and the end-of-month balance on hand is the amount that was consumed during the period.

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Partially Correct

For each transaction in the previous section, enter the appropriate dollar amount in the appropriate column. Each dollar amount should be shown twice for each transaction date. If the amount reduces a balance, then enter the amount as a negative number using a minus sign. The Supplies Expense is already a negative number. When finished, total the columns to determine the November 30, 2014 balance of each column.

	Assets			=	Liabilites	+	Owner's Equity
Transaction No.	Cash	+	Supplies	=	Accounts Payable	+	D. Clayton, Capital		Supplies Exp.
Balance, Nov. 1, 2014	0		0		0		0		0
Nov. 2, 2014
Nov. 4, 2014
Nov. 24, 2014
Nov. 30, 2014
Balance, Nov. 30, 2014