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Concept explainers
(1)
Asset:
Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue.
Liability:
Liabilities include the claims of the creditors on the assets of the business. The liability is the obligation of the business.
Stockholder’s equity:
Stockholder’s equity refers to the right the owner possesses over the resources of the business. Revenues and the expenses are the components of the owner’s equity.
Revenues:
Revenue refers to the income received from the business activity or sale of the output, during the accounting period.
Expenses:
Expenses refer to the cost incurred on the necessary purchases of the fixed assets by the firm, or the production of the goods and services, during the accounting period.
To Indicate: The type of account for each of the given accounts.
(2)
Normal balance:
Normal balance refers to the excess of amount on one side, over the amount on the other side in an account. The excess amount of debit side over the credit side is shown as the normal debit balance. The excess amount of credit side over the debit side is shown as the normal credit balance.
Type of account | Normal balance |
Asset account | Debit balance |
Liability account | Credit balance |
Expense account | Debit balance |
Revenue account | Credit balance |
Retained earnings account | Credit balance |
Dividend account | Debit balance |
Table (2)
To Indicate: The type of account for each of the given accounts.
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Chapter 2 Solutions
Financial Accounting
- Indicate how changes in these types of accounts would be recorded (Dr for debit; Cr for credit). Table 3.23arrow_forwardAccount Titles and Explanation (To record sales on account) (To record collection of accounts receivable) Debit Credit 100arrow_forwardWhen you collected Accounts Receivables, your entry would include? * O Debit Accounts Receivable O Credit Cash O Debit Cash O Credit Accounts Payablearrow_forward
- Identify the normal balance (debit [Dr] or credit [Cr]) for each of the following accounts: __________ Accounts Receivable. __________Equipment.arrow_forwardWhich one of the four methods of payments creates an accounts receivable? Select one: a. cash in advance b. open account c. draft d. letter of creditarrow_forwardWhich of the following accounts has a normal credit balance? a. Accounts Receivable b. Yura Wun, Capital X c. Supplies Expense d. Copyrightsarrow_forward
- Give what is required, For the Classification: (Classify the account if it is current/noncurrent asset; current/non-current liabilities; equity; revenue or expense); For the normal balance (answer whether the normal balance is a debit or credit) For the presentation (Classify whether a balance sheet or an income statement account). ACCOUNT CLASSIFICATION NORMAL BALANCE PRESENTATION OWNER’S DRAWING PETTY CASH FUND ACCOUNTS RECEIVABLE NOTES RECEIVABLE (6 MOS.) NOTES PAYABLE (2 YEARS) INTEREST EXPENSE BONDS PAYABLE UNEARNED INCOME ACCRUED EXPENSE PREPAID EXPENSE SUPPLIES COST OF GOOD SOLDS MERCHANDISE INVENTORY, END MERCHANDISE INVENTORY, BEG PATENT GOODWILL ADVANCES FROM CUSTOMERS ADVANCES TO SUPPLIERS…arrow_forwardA credit memorandum results in a(n) ___ in a customers accounts receivable file. A. memo B. decrease C. Transer D. Increasearrow_forwardBelow is a list of common accounts.Accounts Debit or CreditCash 1.__________Service Revenue 2.__________Salaries Expense 3.__________Accounts Payable 4.__________Equipment 5.__________Retained Earnings 6.__________Utilities Expense 7.__________Accounts Receivable 8.__________Dividends 9.__________Common Stock 10.__________Required:Indicate whether the normal balance of each account is a debit or a credit.arrow_forward
- estion A "receipt on account" results in a credit to: An A/P account Bank An A/R account Capitalarrow_forwardIdentify the normal balance for each of the following accounts. Choose Dr for Debit; Cr for Credit. Table 3.6arrow_forwardExplain what is meant by the term real accounts (also known as permanent accounts).arrow_forward
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