acct ch 2

Journalize "cash of 7,500 is received for services performed"

Cash 7,500 Service Revenue 7,500 (Received cash for services performed)

Journalize "Quin Wei invests 9,000 cash in the business"

Cash 9,000 Owner's Capital 9,000 (Invested cash in the business)

Indicate the account debited and the amount credited for "cash is received on signing a note payable?"

Debit Cash and credit Notes Payable.

Indicate the account debited and the amount credited for "employees are paid salaries in cash'?

Debit Salaries and Wages Expense and credit Cash.

Indicate the account debited and the amount credited for "supplies are purchased on an account?"

Debit Supplies and credit Accounts Payable.

"The terms debit and credit mean increase and decrease, respectively." Does it? Why?

Disagree. The terms debit and credit mean left and right respectively.

Erica Hernadaz, a beginning accounting student, believes debit balances are favorable and credit balances are unfavorable. Is Erica correct? Explain.

Erica is incorrect. A debit balance only means that debit amounts exceed credit amounts in an account. Conversely, a credit balance only means that credit amounts are greater than debit amounts in an account. Thus, a debit or credit balance is neither favorable nor unfavorable.

Will owner's drawings have debit entries, credit entries or both?

debit

Will salaries and wages expense have debit entries, credit entries or both?

debit

State the rules of debit and credit as applied to asset accounts

Asset accounts are increased by debits and decreased by credits.

What are the basic steps in the recording process?

(1) Analyze each transaction for its effect on the accounts. (2) Enter the transaction information in a journal. (3) Transfer the journal information to the appropriate accounts in the ledger.

What are the advantages of using a journal in the recording process?

(1) It discloses in one place the complete effects of a transaction. (2) It provides a chronological record of all transactions. (3) It helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared.

describe the parts of a T account

A T account has the following parts: (a) the title, (b) the left or debit side, and (c) the right or credit side.

What is a chart of accounts and why is it important?

A chart of accounts is a list of accounts and the account numbers that identify their location in the ledger. The chart of accounts is important, particularly for a company that has a large number of accounts, because it helps organize the accounts and define the level of detail that a company desires in its accounting system.

What is a trail balance and what are its purposes?

A trial balance is a list of accounts and their balances at a given time. The primary purpose of a trial balance is to prove (check) that the debits equal the credits after posting. A trial balance also facilitates the discovery of errors in journalizing and posting. In addition, it is useful in preparing financial statements.

Health Precourt, a fellow student, contends that the double-entry system means each transaction must be recorded twice. Is Health correct? Explain.

Heath is incorrect. The double-entry system merely records the dual effect of a transaction on the accounting equation. A transaction is not recorded twice; it is recorded once, with a dual effect.

State the rules of debit and credit as applied to owner's equity?

Liability accounts are decreased by debits and increased by credits.

Journalize "insurance of 800 is paid for the year"

Prepaid Insurance 800 Cash 800 (Paid one-year insurance policy)

State the rules of debit and credit as applied to liability accounts

Revenues and owner's capital are increased by credits and decreased by debits. Expenses and owner's drawing are increased by debits and decreased by credits.

Journalize "Supplies of 2,000 are purchased on an account"

Supplies 2,000 Accounts Payable 2,000 (Purchased supplies on account)

What is a ledger?

The entire group of accounts maintained by a company, including all the asset, liability, and owner's equity accounts, is referred to collectively as the ledger.

Will accounts payable have debit entries, credit entries or both?

both

Will accounts receivable have debit entries, credit entries or both?

both

Will cash have debit entries, credit entries or both?

both

When entering a transaction in the journal, should the debit or credit be written first?

debit

Normal balance for accounts payable?

credit

Normal balance for owner's capital?

credit

Normal balance for service revenue?

credit

Which should be indented, debit or credit?

credit

Will service revenue have debit entries, credit entries or both?

credit

Normal balance for cash?

debit

Normal balance for owner's drawings?

debit

Normal balance for salaries and wages expense?

debit

Normal balance for accounts receivable?

debit.