Concept explainers
Asset: It refers to all valuable items that a company owns or items that generate some income to the company whether tangible or intangible. The more assets a company owns, the stable its financial position would be.
Accounting rule for assets is,
- Increase in assets is always debited.
- Decrease in assets is always credited.
Liability: It refers to all items that have some monetary value in market and that company owes from others. The liability is much important for a company for financial support.
Accounting rule for liabilities is,
- Increase in liabilities is always credited.
- Decrease in assets is always debited.
Equity: It refers to the contribution that an owner makes to the company. The more equity the company has, the more profitable the company would be.
Accounting rule for equity is,
- Increase in equity is always credited.
- Decrease in equity is always debited.
Revenue: It refers to the amount related with the incomes that a company earns form its operations and transactions.
Accounting rule for revenue is,
- Increase in revenue should be credited.
- Decrease in revenue should be debited.
Expense Account: It refers to the amount related with the expenditure that a company incurs for its efficient running and operations.
Accounting rule for expense account is,
- Increase in expense should be debited.
- Decrease in expense should be credited.
To identify: Accounts that are either an asset (A), liability (L), equity (EQ), revenue (R) or expense (E) account along with their identification number.
a.
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FINANCIAL ACCT.FUND.(LOOSELEAF)
- Identify whether each of the following transactions would be recorded with a debit (Dr) or credit (Cr) entry. Table 3.8arrow_forwardIdentify whether the following transactions would be recorded with a debit (Dr) or credit (Cr) entry. Indicate the normal balance of the account. Table 3.20arrow_forwardIdentify in what ledger (general or subsidiary or both) each of the following accounts is shown. Accounts Ledger a. Rent Expense. select a type of ledger b. Accounts Receivable—Cabrera. select a type of ledger c. Notes Payable. select a type of ledger d. Accounts Payable—Pacheco. select a type of ledgerarrow_forward
- Which item will appear on the credit side of the ledger account? a. Salary b. Drawings c. Service revenue d. Accounts receivablearrow_forwardWhich of the following accounting records is the main source of information used to prepare thefinancial statements?A. journal entriesB. T-accountsC. trial balanceD. chart of accountsarrow_forwardIndicate how changes in the following types of accounts would be recorded (Dr for debit; Cr for credit). Table 3.18arrow_forward
- Classify each of the accounts listed below as assets (A), liabilities (L), owners equity (OE), revenue (R), or expenses (E). Indicate the normal debit or credit balance of each account. Indicate whether each account will appear in the Income Statement columns (IS) or the Balance Sheet columns (BS) of the work sheet. Item 0 is given as an example.arrow_forwardIndicate how changes in these types of accounts would be recorded (Dr for debit; Cr for credit). Table 3.23arrow_forwardWhich of these accounts commonly requires both debit and credit entries? A. Sales Revenue B. Utilities Expense C. Accounts Receivable D. Common Stockarrow_forward
- Use the journals and ledgers that follows. Total and rule (draw a line under the column of numbers) the journals. Post the transactions to the subsidiary ledger and (using T-accounts) to the general ledger accounts. Then prepare a schedule of Accounts Payable.arrow_forwardGENERAL LEDGER ACCOUNTS Set up T accounts for each of the general ledger accounts needed for Exercise 4-2A and post debits and credits to the accounts. Foot the accounts and enter the balances. Prove that total debits equal total credits.arrow_forwardIdentify the normal balance for each of the following accounts. Choose Dr for Debit; Cr for Credit. Table 3.6arrow_forward
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