Linking debit or credit with normal balance
C5
Indicate whether a debit or credit decreases the normal balance of each of the following accounts:
a. Office Supplies debit
b. Repair Services Revenue debit
c. Interest Payable credit
d. Accounts Receivable debit
e. Salaries Expense credit
f. Owner Capital debit
g. Prepaid Insurance debit
h. Buildings debit
i. Interest Revenue debit
j. Owner Withdrawals credit
k. Unearned Revenue credit
l. Accounts Payable credit
Is this correct
Linking debit or credit with normal balance
Indicate whether a debit or credit decreases the normal balance of each of the following accounts:
a. Office Supplies debit b. Repair Services Revenue debit c. Interest Payable credit d. Accounts Receivable debit e. Salaries Expense credit f. Owner Capital debit g. Prepaid Insurance debit h. Buildings debit i. Interest Revenue debit j. Owner Withdrawals credit k. Unearned Revenue credit l. Accounts Payable credit are they correct?
To determine whether a debit or credit decreases the normal balance of an account, you need to understand the concept of normal balances in accounting. In accounting, the normal balance is the side (debit or credit) that increases the balance of an account.
Here are the accounts mentioned along with whether a debit or credit decreases their normal balance:
a. Office Supplies: The normal balance is a debit, so a debit entry (in this case, a purchase of office supplies) increases the balance. Therefore, a credit entry (such as returning office supplies) would decrease the normal balance.
b. Repair Services Revenue: This account represents revenue, and revenues have a normal credit balance. Therefore, a debit entry (such as a refund) would decrease the normal balance.
c. Interest Payable: This liability account normally has a credit balance. A credit entry (such as paying interest) decreases the normal balance.
d. Accounts Receivable: This asset account normally has a debit balance. A debit entry (such as writing off bad debt) decreases the normal balance.
e. Salaries Expense: This expense account normally has a debit balance. A debit entry (such as reducing salary expenses) decreases the normal balance.
f. Owner Capital: This equity account normally has a credit balance. A credit entry (such as a capital withdrawal) decreases the normal balance.
g. Prepaid Insurance: This asset account normally has a debit balance. A debit entry (such as expensing a portion of prepaid insurance) decreases the normal balance.
h. Buildings: This asset account normally has a debit balance. A debit entry (such as depreciation) decreases the normal balance.
i. Interest Revenue: This revenue account normally has a credit balance. A credit entry (such as refunding interest) decreases the normal balance.
j. Owner Withdrawals: This equity account normally has a debit balance. A debit entry (such as a capital deposit) decreases the normal balance.
k. Unearned Revenue: This liability account normally has a credit balance. A credit entry (such as recognizing the revenue) decreases the normal balance.
l. Accounts Payable: This liability account normally has a credit balance. A credit entry (such as paying off a supplier) decreases the normal balance.
Remember, understanding the normal balances of accounts is crucial for accurate bookkeeping and financial reporting.