4.1 Ledger Accounts

4.1 Ledger Accounts

A business has assets, liabilities and owner’s equity, each containing multiple items. Each of these items is considered an account. A change in any of the accounts changes the owner’s financial position. An account has its own page and each page is designed to record the changes that occur within the account. All of these accounts or pages put together are called a ledger. A ledger is a group or file of accounts.

Each item on a balance sheet is considered a separate account and receives its own page. These accounts are written as a T with the name of the account on top. The beginning value of the account is written on the first line of the T account and this can be found on the balance sheet. The beginning value of the account may be written on the left or right depending on what type of account it is. Beginning values of asset accounts are written on the left side while beginning values of liability and owner’s equity accounts are written on the right side.

Assets / = / Liabilities / + / Owner’s Equity
Beginning
$ Value / Beginning
$ Value / Beginning
$ Value

Hand-in assignment electronically!

Assignment: pg 82 Exercises # 1-3

*Complete a Balance Sheet for #3, not the accounting equation*

Example

Pacific Trucking has ______accounts. Each item on the balance sheet is an account and would be written on a separate page with its own T account.

PACIFIC TRUCKING
BALANCE SHEET
JUNE 30, 2010
Assets / Liabilities
Cash / $3265 / Bank Loan / $18 000
A/R – W. Caruso / 150 / A/P – Dini Bros. / 1516
A/R – R. Van Loon / 620 / A/P – Packham Products / 3946
Supplies / 2465 / Total Liabilities / $23 462
Trucks / 55 075 / Owner's Equity
Equipment / 22 174 / B. Rissen, Capital / 60 287
Total Assets / $83 749 / Total Liabilities and Equity / $83 749

ASSETS = LIABILITIES + OWNER’S EQUITY