Account 'normal' balances; Increase/decrease decisions
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Indicate whether debit or credit decreases the normal balance of each of the following accounts:
office supplies-repair services revenue-interest payable-accounts receivable-salaries expenses-owner capital-prepaid insurance-buildings-interest revenue-owner withdrawals-unearned revenue-accounts payable.
Identify whether a debit or credit yields the indicated change for each of the following accounts:
to increase store equipment- to increase owner revenue- to increase cash- to increase utilities expense- to increase fees earned- to decrease unearned revenue-to decrease prepaid insurance-to decrease notes payable-to decrease accounts receivable-to decrease owner capital.
Identify whether the normal balances (in parentheses) assigned to the following accounts are correct or incorrect:
office supplies (debit) owner withdrawals (credit) fees earned (debit) wages expense (credit) cash (debit) prepaid insurance (credit) wages payable (credit) building (debit).
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Solution Summary
The solution gives the rules for increase or decrease including the normal balance for the five types of account groupings in a financial statement. Each category of account is explained including a short answer for the errors in the third group of accounts.
Solution Preview
Asset and expenses have normal debit balances and increase with a debit, decrease with a credit
Liabilities, equity and revenue have normal credit balances and increase with a credit, decrease with a debit
Office supplies, normal debit
Repair revenue, normal credit
Interest payable, normal credit
Accounts receivable, normal debit
Salaries expenses, normal debit
Owner ...
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