The General Journal
What are the four parts of a journal entry?
(Date, Debit, Credit, Source Doc)
Prepaid Insurance is what type of account?
(Asset)
Owner invests $1,000 cash into the business. What happens to equity?
(Equity increases)
Record: Paid $75 cash for telephone expense.
(Debit Telephone Expense, Credit Cash)
True/False: Every transaction affects at least two accounts.
True
True/False: Supplies are considered an expense when purchased.
(False)
True/False: Revenues decrease owner’s equity.
(False – they increase it)
Which account is credited when cash is paid for rent?
(Cash)
Record: Paid $250 cash for utilities expense.
(Debit Utilities Expense, Credit Cash)
Record: Paid $600 cash for insurance coverage.
(Debit Prepaid Insurance, Credit Cash)
Record: Owner withdrew $100 cash.
(Debit Drawing, Credit Cash)
True/False: Cash decreases with a debit.
(False)
What is the purpose of the Post Ref. column?
(Shows the entry was posted to ledger)
What is the Normal Balance Side for Prepaid Supplies
(Debit)
Which side of Owner’s Capital increases with additional investments?
(Credit)
Record: Received $600 cash on account.
(Debit Cash, Credit Accounts Receivable)
Explain the difference between journalizing and posting.
(Journalizing = record in journal; Posting = transfer to ledger)
Record: Bought $250 of supplies on account.
(Debit Supplies, Credit Accounts Payable)
Record: Performed services for $500 on account.
(Debit Accounts Receivable, Credit Service Revenue)
What does the term “on account” mean?
(Buying or selling on credit)