Chap 3 Accounting
what account has DR+ and CR- ?
Assets
the florist received a utility bill for $325. how would this transactioin affect the accounts?
a debit to utility expense of $325
what is a trial balance?
a list of all accounts showing that the debits and credit totals are equal.
business use a separate _____ to record increases and decreases in each type of asset, liability, owners equity, revenue and expense.
account
whats the account title order used in a trial balance?
assets, liabilities, capital, drawing, revenue and expenses
how many accounts are affected by each transaction?
at least 2
the difference between the footings of the debit and credit sides of the T account is known as the
balance
payment of office rent represents a decreasse in
cash
the purpose of producing a trial balance is to
check that the debit and credit totals are equal
the owners capital account is increased with a
credit
what abbreviation is CR for?
credit
what type of account balances do revenue accounts normally have?
credit
what type of balances do liability accounts normally have?
credit balances
whats one way to find the balance?
debit - credit = balance
a company bought equipment on account. what is the correct entry to record the purchase of the asset on account?
debit equipment and credit accounts payable
what would be the correct entry to record the purchase of supplies for $150 cash?
debit supplies for $150 and credit cash for $150
expenses and drawing
decrease owners equity therefore DR+ and CR- (same as assets)
a debit to an asset account will decrease it.
false
liability accounts normally have debit balances.
false
mandy withdrawals $600 from her business. this transaction increases cash but decreases owners equity.
false
revenue accounts normally have debit balances.
false
services on account increase a revenue account and increase the cash account
false
the fact that each transaction has a dual effect of the accounting elements provides the basis for what is called complex-entry accounting.
false
the total dollar amounts of the debit and the credit sides of a T account are known as
footings
a normal balance is the side of an account that is used to _____ the account.
increase
an increase in an asset account may be offset by a(n)
increase in owners equity
DEA (drawing, expenses, and assets)
increase on debit side
revenues
increase owners equity therefore DR- and CR+
the capital account
increases when the owner invests money in the business
what happens with an expense account?
it is increased with debits
what side is the debit on?
left side
what account has DR- and CR+ ?
liabilities and owners equity
how do you find the ending balance on a capital account from a balance sheet?
make a statement of owners equity with the information given.
are dollar signs used in a trial balance?
no because its not a formal statement
what is the net effect when an asset is purchased with cash?
no net effect to assets; they remain the same
is a trial balance a formal statement or report?
no, only the accountant sees it.
what side is the credit on?
right side
the trial balance
shows the current date
whats a tip to remember what accounts has DR+ and CR- and DR- and CR+
the account(s) on the left side increase on the left side (DR) and the accounts on the right increase on the right side (CR)
the drawing account should be used to show
the amount the owner has taken out of the business
what is the balance?
the difference between the footings of an account.
what side of the equation is assets on?
the left side, therefore increases are entered on the left side (DR)
what side of the equation is liabilities and owners equity on?
the right side, therefore increases are entered on the right side (CR)
what is normal balance?
the side of an account that is increased (+)
what are the parts of a T account?
the title, debit, and credit
what is the footing?
the total dollar amounts on the debit and credit sides of an account
a trial balance is taken periodically to check the equality of the debits and credits.
true
an account is a form or record used to keep track of the increases or decreases in the individual assets, liabilities, owners equity, revenues, and expense of a business entity.
true
increase in owners equity are entered as credits
true
the sum of the debits must equal the sum of the credits.
true
to credit an account is to enter an amount on the right side of the equation.
true
to debit an account is to enter an amount on the left side of the account.
true
when services are performed for which payment will be received later, accounts receivable increases.
true
withdrawals of cash and other assets by the owner for personal reassons dedcrease owners equity
true
double entry transaction
when 2 accounts are affected by each transaction
compound transaction
when 3 or more accounts are affected.
the asset account supplies is increased with a
debit
the rent expense account is increased with a
debit
what abbreviation is DR for?
debit
where do you write the balance?
on the side with the larger footing (total)
what would produce a trial balance that is not balanced?
only the debit, or only the credit, but not both parts of the transaction were recorded.
do the accounts in a trial balance have to be in order?
yes
does the account equation have to remain in balance?
yes, always.