Analyzing business transactions worksheet answers

1. What are the 4 steps to analyze a business transaction?
2. How does the basic accounting equation translate to analyzing the transactions happening within a business?
3. Why do we need to analyze business transactions?
4. What are two items that must be considered and analyzed in a business transaction?
5. Who analyzed business transactions?
6. What are the three basic questions applied in analyzing a business transaction?
7. How do you record business transactions using the accounting equation?
8. What is an example of a business transaction?
9. How do you describe transactions in accounting?
10. How do you identify transactions in accounting?

What are the 4 steps to analyze a business transaction?

The first four steps in the accounting cycle are (1) identify and analyze transactions, (2) record transactions to a journal, (3) post journal information to a ledger, and (4) prepare an unadjusted trial balance.

How does the basic accounting equation translate to analyzing the transactions happening within a business?

Accountants are equipped with a very special tool that they use when analyzing transactions - that tool is the accounting equation. The accounting equation states that assets = liabilities + owner's equity. ... Owner's equity is the amount of money that a business owner personally invests in the business.

Why do we need to analyze business transactions?

Primary purposes of transaction analysis are to gauge the relevance and reliability of a transaction. Relevance indicates a transaction has predictive value. In short, the transaction should add value to the business and allow for predicting future earnings.

What are two items that must be considered and analyzed in a business transaction?

A business transaction has an effect on any of the accounting elements – assets, liabilities, capital, income, and expense.

Who analyzed business transactions?

For example, purchases, sales, pay- ments, and receipts of cash are all business transactions. The accountant analyzes each business transaction to decide what information to record and where to record it.

What are the three basic questions applied in analyzing a business transaction?

List three basic questions that must be answered when analyzing the effects of a business transaction on the accounting equation. 1) What happened? 2) Which accounts are affected? 3) How is the accounting equation affected?

How do you record business transactions using the accounting equation?

Under this approach, transactions are recorded based on the accounting equation, i.e., Assets = Liabilities + Capital. The accounting equation is a statement of equality between the debits and the credits.

What is an example of a business transaction?

A business transaction is an economic event with a third party that is recorded in an organization's accounting system. ... Examples of business transactions are: Buying insurance from an insurer. Buying inventory from a supplier.

How do you describe transactions in accounting?

A transaction is a completed agreement between a buyer and a seller to exchange goods, services, or financial assets in return for money.

How do you identify transactions in accounting?

Identify accounts. Every business transaction is recorded in an account in the accounting database, such as a revenue, expense, asset, liability, or stockholders' equity account. Identify which accounts are to be used to record the transaction. Record the transaction.