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.
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Financial Accounting
- 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 the following entries records the receipt of cash from clients on account? a.Accounts Receivable, debit; Fees Earned, credit b.Cash, debit; Accounts Receivable, credit c.Accounts Receivable, debit; Cash, credit d.Accounts Payable, debit; Fees Earned, creditarrow_forwardTrue Or False? The entry to record a cash receipt from a customer when the service is to be provided in a future period involves a debit to an unearned revenue account.arrow_forward
- A written order for a bank or other financialinstitution to pay a stated dollar amountto a specified business or person is called aa. check.b. deposit slip.c. notes receivable.d. receipt.e. debit memorandumarrow_forwardAccompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts? a. debit Miscellaneous Administrative Expense; credit Cash b. debit Cash; credit Accounts Payable c. debit Accounts Payable; credit Cash d. debit Cash; credit Other Incomearrow_forwardAccompanying the bank statement was a debit memo for bank service charges. What entry is required in the company's accounts? Oa. debit Miscellaneous Administrative Expense; credit Cash Ob. debit Cash; credit Other Income Oc. debit Cash; credit Accounts Payable Od. debit Accounts Payable; credit Casharrow_forward
- When a company records a bank deposit, it will: O A. credit the Cash account on the company's books. O B. debit the Accounts Receivable account on the company's books. OC. debit the Cash account on the company's books. O D. credit the Accounts Payable account on the company's books.arrow_forwardA customer issued a note for an overdue account. Which of the following procedures is correct? A. The note is credited in the general journal by a debit to accounts receivable B. The amount will be posted to the credit side of the customer's card C. The amount will be posted to the debit side of the customer's card D. This will be posted to the accounts receivable general ledger on the debit side.arrow_forwardIdentify which one of the following is a document issued by an individual to his or her bank, directing them to pay the person whose name is mentioned in the document the sum specified in it? a. Cheque b. Demand draft c. Bill of exchange d. Credit cardarrow_forward
- Identify the items from the following list that are likely to serve as source documents. Is this a Item source document? a. Invoice from supplier b. Ledger c. Statement of cash flows d. Company revenue account e. Sales receipt f. General journal g. Prepaid insurance account h. Employee time clock record i. Credit card receiptarrow_forwardWhich of the following transactions will be recorded in cash payment journal? a. Receipt of income b. Purchase of goods on credit c. Sale of goods for cash d. Payment of monthly expensesarrow_forwardWhen transferring money from the regular checking account to a special purpose payroll account which of the following accounts would be debited? Cash Wage expense Payroll Cash Net Payarrow_forward
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