14 terms

Accounting I Chapter 2

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Terms in this set (...)

T account
an accounting device used to analyze transactions
debit
an amount recorded on the left side of a T account
credit
an amount recorded on the right side of a T account
normal balance
the side of the T account that is increased
chart of accounts
a list of accounts used by a business
4 questions for analyzing a transaction into debit and credit parts
1. Which accounts are affected?
2. How is each account classified? (asset, liab., capital)
3. How is each classification changed? (increased, decreased?)
4. How is each amount entered in the accounts? (debit, credit side?)
What two accounts are affected when a business pays cash for supplies?
supplies - asset - increased - debit
cash - asset - decreased - credit
What two accounts are affected when a business receives cash from sales?
cash - asset - increased - debit
sales - revenue(owners equity) - increased - credit
What two accounts are affected when services are sold on account?
Accounts Rec. - asset - increased - debit
Sales - revenue(owners equity) - increased - credit
What two accounts are affected when a business pays cash to the owner for personal use?
Owner, Drawing - owners equity - decreased - debit
Cash - asset - decreased - credit
Are revenue accounts increased on the debit or credit side?
Credit - sales (revenue) ultimately increases owners equity so sales increase on the credit side
Are expense accounts increased on the debit side or credit side?
Debit - expenses ultimately decrease owners equity so expenses would increase on the debit side
What two accounts are affected when a business pays cash for rent expense?
Rent expense - increase - debit
Cash - decrease - credit
What two accounts are affected when a business pays cash for utilities?
Utility expense - increase - debit
Cash - decrease - credit
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