Debits/Credits
These two types of equity accounts normally hold a debit balance.
What are Expenses and Drawings?
This document shows the revenue, expenses, and net income of a business.
What is the income statement?
Use double-entry accounting principles to describe the following transaction:
Sold services for $900 cash.
Debit Bank and credit Fees Earned $900.
Use double-entry accounting principles to describe the following transaction:
Issued a cheque to W. Decorte, $100 for part time wages.
Debit wages expense and credit bank, $100.
For each of the following: Assets, Liabilities, Revenue, Expenses, Drawings, state which will increase and which will decrease with the following transactions.
Performed a service for a customer for cash.
Assets: Increase
Revenue: Increase
This is why we can be reasonably certain that revenue accounts will hold a credit balance at the end of the year
What is because debiting revenue is exceptionally rare
This type of equity account is used for when an owner takes money out of the business for personal use.
What are Drawings?
Use double-entry accounting principles to describe the following transaction:
Sold services on credit to B. Hull, $1500.
Use double-entry accounting principles to describe the following transaction:
Issued a cheque for $175 to A. Dodds, an owner.
Debit A. Dodds Drawings, credit bank $175.
For each of the following: Assets, Liabilities, Revenue, Expenses, Drawings, state which will increase and which will decrease with the following transactions.
Performed a service for a customer on credit.
Assets: Increase
Revenue: Increase
What is a sales return?
The period of time over which earnings are measured.
What is a fiscal period?
Use double-entry accounting principles to describe the following transaction:
Paid the utilities bill that arrived today, $125.
Debit Utilities Expense and credit Bank $125.
Use double-entry accounting principles to describe the following transaction:
Sold services to G. Yung for $1200 on credit
Debit A/R G. Yung and credit revenue $1200.
For each of the following: Assets, Liabilities, Revenue, Expenses, Drawings, state which will increase and which will decrease with the following transactions.
Paid cash to have an automobile repaired.
Assets: Decrease
Expenses: Increase (causing equity to decrease)
These two types of equity account normally hold a credit balance
What are Revenue and Capital?
This GAAP principle requires that revenue be recorded in the accounts at the time that the transaction is completed.
What is the Revenue Recognition Principle?
Use double-entry accounting principles to describe the following transaction:
Paid an employee's wages, $600.
Debit Wages Expenses and Credit Bank $600
Use double-entry accounting principles to describe the following transaction:
Received a bill from Banner News regarding a $500 advertisement purchased on credit.
Debit Advertising expense and credit A/P Banner News $500.
For each of the following: Assets, Liabilities, Revenue, Expenses, Drawings, state which will increase and which will decrease with the following transactions.
Paid an employee their weekly salary in cash.
Assets: Decrease
Expenses: Increase (causing equity to decrease)
In the following transaction, which account is debited?
Paid $2000 for monthly rent.
This GAAP principle requires that expenses related to specific revenue be recorded in the same fiscal period as the revenue earned.
What is the Matching Principle?
Use double-entry accounting principles to describe the following transaction:
Mary Hartman, the owner, took out $250 for personal use.
Debit Drawings and Credit Bank for $250.
Use double-entry accounting principles to describe the following transaction:
Alisha Dodds, an owner, invested $4000 in the business
Debit bank and credit A. Dodds, capital $4000.
For each of the following: Assets, Liabilities, Revenue, Expenses, Drawings, state which will increase and which will decrease with the following transactions.
Paid cash to reduce the bank loan.
Assets: Decrease
Liabilities: Decrease