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).
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
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.