Concept explainers
(a)
Transaction:
A transaction is a business event which has a monetary value that creates an impact on the business. The process of identifying the economic effects of each transaction of the business is known as transaction analysis.
Rules of debit and credit:
“An increase in an asset account, an increase in an expense account, a decrease in liability account, and a decrease in a revenue account should be debited.
Similarly, an increase in liability account, an increase in a revenue account and a decrease in an asset account, a decrease in an expenses account should be credited”.
To identify: which account should be debited, and which account should be credited for purchase of supplies on account
(b)
To identify: Which account should be debited, and which account to be credited for cash received on signing a promissory note.
(c)
To identify: Which account should be debited, and which to be credited for salaries paid to employees.
Want to see the full answer?
Check out a sample textbook solutionChapter 3 Solutions
FINANCIAL ACCOUNTING: TOOLS WP ACCESS
- From the following list, identify which items are considered original sources: A. accounts receivable B. receipt from post office for post office box C. purchase order D. general ledger E. adjusted trial balance F. statement of retained earnings G. electric bill H. packing slip I. company expense account J. statement of cash flowsarrow_forwardFor the following accounts please indicate whether the normal balance is a debit or a credit. A. Sales B. Dividends C. Office Supplies D. Retained Earnings E. Accounts Receivable F. Prepaid Rent G. Prepaid Insurance H. Wages Payable I. Building J. Wages Expensearrow_forwardFor each of the following transactions, state which special journal (Sales Journal, Cash Receipts Journal, Cash Disbursements Journal, Purchases Journal, or General Journal) and which subsidiary ledger (Accounts Receivable, Accounts Payable, neither) would be used in recording the transaction. A. Sold inventory for cash B. Issued common stock for cash C. Received and paid utility bill D. Bought office equipment on account E. Accrued interest on a loan at the end of the accounting period F. Paid a loan payment G. Bought inventory on account H. Paid employees I. Sold inventory on account J. Paid monthly insurance billarrow_forward
- For each of the transactions, state which special journal (sales journal, cash receipts journal, cash disbursements journal, purchases journal, or general journal) and which subsidiary ledger (Accounts Receivable, Accounts Payable, or neither) would be used in recording the transaction. A. Paid utility bill B. Sold inventory on account C. Received but did not pay phone bill D. Bought inventory on account E. Borrowed money from a bank F. Sold old office furniture for cash G. Recorded depreciation H. Accrued payroll at the end of the accounting period I. Sold inventory for cash J. Paid interest on bank loanarrow_forwardWhich of these transactions requires a credit entry to Revenue? A. received cash from services performed this month B. collected balance due from customers C. received cash from bank loan D. refunded a customer for a defective productarrow_forwardIdentify which of the following accounts would be listed on the companys Post-Closing Trial Balance. A. Accounts Receivable B. Accumulated Depreciation C. Cash D. Office Expense E. Note Payable F. Rent Revenue G. Retained Earnings H. Unearned Rent Revenuearrow_forward
- Indicate whether each account that follows has a normal debit or credit balance. A. Unearned Revenue B. Office Machines C. Prepaid Rent D. Cash E. Legal Fees Earned F. Salaries Payable G. Dividends H. Accounts Receivable I. Advertising Expense J. Retained Earningarrow_forwardWhich of the following pairs of accounts are impacted the same with debits and credits? A. Cash and Unearned Service Revenue B. Electricity Expense and Office Supplies C. Accounts Receivable and Accounts Payable D. Buildings and Common Stockarrow_forwardState whether the balance in each of the following accounts increases with a debit or a credit. A. Office Supplies B. Retained Earnings C. Salaries Expense D. Accounts Receivable E. Service Revenuearrow_forward
- For the following accounts indicate whether the normal balance is a debit or a credit. A. Unearned Revenue B. Interest Expense C. Rent Expense D. Rent Revenue E. Accounts Payable F. Cash G. Supplies H. Accounts Payable I. Equipment J. Utilities Expensearrow_forwardIf a journal entry includes a debit or credit to the Cash account, it is most likely which of the following? A. a closing entry B. an adjusting entry C. an ordinary transaction entry D. outside of the accounting cyclearrow_forwardName a source document that provides information about each of the following types of business transactions: a. Cash payment b. Cash receipt c. Sale of goods or services d. Purchase of goods or servicesarrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:CengageFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning