Accounting: Chapter Two

T account

An accounting device used to analyze transactions

Paid cash on account to City Supplies.

Debit: Accts. Pay.--City Supplies Credit: Cash

Sold services on account to Parkview Company.

Debit: Accts. Rec.--Parkview Credit: Sales

B

Increases in a revenue account are shown on a T account's (A) debit side (B) credit side (C) left side (D) none of these. (p. 43)

A

Increases in an asset account are shown on a T account's (A) debit side (B) credit side (C) right side (D) none of these. (p. 37)

B

An amount recorded on the right side of a T account is a (A) debit (B) credit (C) normal balance (D) none of these. (p. 33)

Which accounts are increased on the debit side?

Assets, drawing, expenses (All dogs eat)

A

Increases in an expense account are shown on a T account's (A) debit side (B) credit side (C) right side (D) none of these. (p. 45)

A

Increases in an owner's drawing account are shown on a T account's (A) debit side (B) credit side (C) right side (D) none of these. (p. 47)

B

Increases in any liability account are shown on the T account's (A) debit side (B) credit side (C) left side (D) none of these. (p. 39)

B

The normal balance side of an owner's capital account is the (A) debit side (B) credit side (C) left side (D) none of these. (p. 33)

A

The normal balance side of an owner's drawing account is the (A) debit side (B) credit side (C) right side (D) none of these. (p. 47)

A

The normal balance side of any asset account is the (A) debit side (B) credit side (C) right side (D) none of these. (p. 33)

A

The normal balance side of any expense account is the (A) debit side (B) credit side (C) right side (D) none of these. (p. 45)

B

The normal balance side of any liability account is the (A) debit side (B) credit side (C) left side (D) none of these. (p. 33)

B

The normal balance side of any revenue account is the (A) debit side (B) credit side (C) left side (D) none of these. (p. 43)

B

The values of all equities or claims against the assets (liabilities and owner's equity) are on the accounting equation's (A) left side (B) right side (C) debit side (D) none of these. (p. 32)

A

The values of all things owned (assets) are on the accounting equation's (A) left side (B) right side (C) credit side (D) none of these. (p. 32)

normal balance

the side of the account that is increased

Four questions to analyze a transaction into its debit and credit parts

1. What accounts are affected? 2. How is each account classified? 3. How is each account balance changed? 4. How is each amount entered in the accounts?

Two accounting rules for increases and decreases of account balances

1. account balances increase on the normal side of the account 2. account balances decrease on the side opposite the normal balance side of an account

Each transaction changes the balances in at least _____ accounts.

2

Which accounts are increased on the credit side?

Liabilities, capital, sales (Lazy cats sleep)

chart of accounts

a list of accounts used by a business

debit

an amount recorded on the left side of a T account

credit

an amount recorded on the right side of a T account

List (debit/credit) T-account first

debit

D

Debits must equal credits (A) in a T account (B) on the equation's left side (C) on the equation's right side (D) for each transaction. (p. 36)

A

An amount recorded on the left side of a T account is a (A) debit (B) credit (C) normal balance (D) none of these. (p. 33)

Paid cash for advertising

Debit: Advertising Expense Credit: Cash

Received cash from owner as an investment.

Debit: Cash Credit: N. Lee, Capital

Received cash from sales.

Debit: Cash Credit: Sales

Received cash on account from Parkview Company

Debit: Cash Credit: Accts. Rec.--Parkview

Paid cash to owner for personal use.

Debit: N. Lee, Drawing Credit: Cash

Paid cash for insurance.

Debit: Prepaid Insurance Credit: Cash

Bought supplies on account from City Supplies.

Debit: Supplies Credit: Accts. Pay.--City Supplies

Paid cash for supplies.

Debit: Supplies Credit: Cash

B

Decreases in an asset account are shown on a T account's (A) debit side (B) credit side (C) left side (D) none of these. (p. 37)

A

Decreases in any liability account are shown on a T account's (A) debit side (B) credit side (C) right side (D) none of these. (p. 40)