Exam 3: The Recording Process: Debits and Credits

______________, _______________, and _______________ have debit normal account balances whereas _______________, ________________, and ________________ have credit normal account balances.

Which of the following increases the Owner's Capital account?

An investment of cash by the owner of a business will increase the owner's capital account.

Services performed on account requires a debit to Accounts Receivable.

A new account is opened for each transaction entered into by a business firm.

Identify the accounts to 1. The owner, O. Gulag, invested $8,000 cash in the business. 2. Purchased supplies on account for $1,000. 3. Billed customers $2,000 for services performed. 4. Paid salaries of $1,200.

High Country Real Estate received a $750 bill for online advertisitng which it will pay at a later date. Upon receipt of the bill, High Country Real Estate should

Clarkson Company provided consulting services and billed the client $10,600. This transaction results in

Purchasing supplies on account will increase Accounts Payable.

In the first month of operations, the total of the debit entries to Three Sisters Company's cash account amounted to $1,000. The credit entries to the cash account totaled $300. At the end of the month, the cash account has a(n)

Which account listed below has a normal debit balance?

When a liability account is credited, it indicates

When Accounts Receivable is credited, it indicates

The accounting equation could be written as assets + expenses + owner's drawings = liabilities + revenues + owner's capital.

A credit is recorded to increase an expense.

The owner's drawings account

The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

The Cash account normally shows a

Haselhof Company purchases equipment for $2,400 and supplies for $700 from Behrman Co. for $3,100 cash. Recording this transaction will include a

Cora's Services was formed on May 1. The following transactions and events took place during the first month. 1. Cora Jacq invested $20,000 cash in the company, as its sole owner. 2. Hired two employees to work in the office. They will each 3. Signed a 2-year rental agreement on an office; paid $24,000 cash for rent. 4. Purchased equipment costing $30,000; paid $6,000 now and the remainder on account. 5. Paid $2,100 cash for furniture. 6. Purchased basic office supplies for $520 cash. 7. Purchased more office supplies for $1,300 on account. 8. Total revenues earned were $50,000: $38,000 cash and $12,000 on account. 9. Paid $400 to suppliers from item 7. 10. Received $4,000 from customers in payment of accounts receivable. 11. Received utility bill in the amount of $490, to 12. Paid the monthly salaries of the two employees, totaling $4,000. Indicate the account debited and the account credited for each date.