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If you have difficulty answering the following questions, learn more about this topic by reading our Debits and Credits (Explanation).
Use the following information for questions 1 and 2:
A company receives $500 of cash as an additional investment in the company by its owner, Mary Smith. The company's Cash account is increased and Mary Smith, Capital is increased.
Should the $500 entry to the Cash account be a debit?
Should the $500 entry to Mary Smith, Capital be a debit?
Use the following information for questions 3 through 6:
A company using the accrual method of accounting performed services on account in August. The services were for $2,000 and the company gave the customer credit terms that state the amount is to be paid to the company in September.
Assuming that the company prepares monthly income statements, what will be the account debited for $2,000 in August?
Which account should the company credit for $2,000 in August?
In September when the company receives the $2,000 from the customer, which account should the company debit?
In September when the company receives the $2,000 from the customer, which account should the company credit?
Generally when an expense is involved in a transaction, an expense will be
Generally when revenues are involved in a transaction, a revenue account will be
The accountant's word to indicate that an entry will be recorded on the left-side of an account is
A contra-asset account such as Accumulated Depreciation will likely have which balance?
A contra-liability account such as Discount on Notes Payable will likely have which balance?