Accounting 1: Debits and Credits Practice

1. Accounting 1: Debits and Credits Practice By Mr. Duvall

2. Problem 4-2, Page 88 (Answer) • 1. a. Office Equipment (asset) is increased (debit). • 1. b. Accounts Payable (liability) is increased (credit). • 2. a. Office Furniture (asset) is increased (debit). • 2. b. Alice Roberts, Capital (owner’s equity) is increased (debit). • 3. a. Accounts Payable (liability) is decreased (debit). • 3. b. Cash in Bank (asset) is decreased (credit).

3. What’s Wrong Here? Description Transaction Analysis • The business bought office supplies on account for $850.

4. What’s Wrong Here? Description Transaction Analysis • The business paid $200 on account to Northern Office Supplies.

5. What’s Wrong Here? Description Transaction Analysis • The business received $200 payment on account from customer Harry Navel.

6. What’s Wrong Here? Description Transaction Analysis • The owner transferred a computer of her own valued at $1,100 to the business. This one is a-ok!

7. What Rules Do You See So Far? • Even with double-entry accounting, the accounting equation still stays in balance • Each transaction has a debit and a credit • Each transaction affects at least two accounts • An asset’s increase side (debit) is the opposite of the increase side for liabilities and owner’s equity (both credit)

8. What Rules Do You See So Far? (continued) • If a transaction affects an asset and a liability, both will increase (or decrease) • If a transaction affects an asset and owner’s equity, both will increase (or decrease) • If a transaction affects two asset accounts, one will increase and one will decrease • In the book examples, the debit side of the transaction is always first, and the credit side is always second