Account Classifications
What are the five classifications of accounts?
Asset accounts, liability accounts, equity accounts, revenue accounts, and expense accounts.
Is the side that increases or decreases considered the normal balance?
The side of an account that increases is called the normal balance of the account.
True or false: Accounts receivable are a type of account that companies receive payments from clients through.
True
What is the first step in the process of posting transactions in a ledger?
Using the account titles to create all of the accounts.
What should you write first in a General Journal?
the date
What is the Accounting Equation?
Assets = Liabilities + Owner’s Equity
Is debit recorded on the left or right side of an account?
Debit is an amount recorded on the left side of an account as debit refers to to left.
When you pay cash for rent, what type of account is debited?
Rent Expense
What kind of receipt are general ledger receipts considered?
General ledger receipts are considered to be G-type receipts.
What is the last thing you should write in a general journal?
the source document
What side of the General Journal does the “assets” classification go on?
The left side
Is credit recorded on the left or right side of an account?
Credit is an amount recorded on the right side of an account as credit refers to right.
When you pay cash for a liability, is Accounts Payable debited or credited?
Debited
How many times should you label the same month in a single account?
Only one time.
When journaling “paid cash on account” which account should be credited?
Cash
What is the account classification “asset”?
An asset is something that a business owns that holds value and can be sold for money.
If Cash increases, what side of the account is the normal balance?
Debit is the normal balance, as cash is an asset on the left side of the accounting equation.
T/F: A utility expense is the cost a business pays to occupy a property.
False
T/F: You don’t have to create an account for account titles that you do not use.
False
What letter symbol is used for a Memorandum?
M
What is the term for buying an item used to operate a business?
An expense
If accounts payable increases, what side of the account is the normal balance?
Credit is the normal balance, as accounts payable is a liability on the right side of the accounting equation.
Is the money brought in through account receivable counted as revenue?
No
Would you add or subtract your balance if a debit was added to an account?
You would add to your balance.
When journaling “sold services on account to Jessica L.” which account should be debited, and which account should be credited?
Debit: Accounts Receivable-Jessica L.
Credit: Sales