I am so lost in this the book does not make sence, I think i did them right what do you think?
QS 2-4
Analyzing debit or credit by account
Identify whether a debit or credit yields the indicated change for each of the following accounts:
a. To increase Store Equipment debit b. To increase Owner Withdrawals debit c. To decrease Cash debit d. To increase Utilities Expense e. To increase Fees Earned credit f. To decrease Unearned Revenue credit g. To decrease Prepaid Insurance debit h. To increase Notes Payable debit i. To decrease Accounts Receivable credit j. To increase Owner Capital credit
QS 2-5
Identifying normal balance
Identify whether the normal balances (in parentheses) assigned to the following accounts are correct or incorrect.
a. Office supplies (Debit) correct b. Owner Withdrawals (Credit) incorrect c. Fees Earned (Debit) incorrect d. Wages Expense (Credit) e. Cash (Debit) correct f. Prepaid Insurance (Credit) incorrect g. Wages Payable (Credit) incorrect h. Building (Debit) correct
To determine whether a debit or credit should be used to yield the indicated change for each account, you need to understand the basic rules of debits and credits in accounting. Here's a brief explanation:
1. Debit (DR): Represents an increase in assets, expenses, and owner's withdrawals. It also represents a decrease in liabilities and owner's equity (except for owner's withdrawals).
2. Credit (CR): Represents an increase in liabilities, owner's equity (except for owner's withdrawals), and revenue. It also represents a decrease in assets and expenses.
Now, let's go through each question and determine the correct answer:
QS 2-4 - Analyzing debit or credit by account:
a. To increase Store Equipment (debit): According to the rules, an increase in assets (Store Equipment) requires a debit entry.
b. To increase Owner Withdrawals (debit): Owner Withdrawals are considered a decrease in owner's equity, so a debit entry is required to increase it.
c. To decrease Cash (debit): As cash is an asset, a decrease in cash requires a debit entry.
d. To increase Utilities Expense: Expenses are increased with a debit entry.
e. To increase Fees Earned (credit): Fees Earned is a revenue account, and revenues are increased with credit entries.
f. To decrease Unearned Revenue (credit): Unearned Revenue is considered a liability, so a decrease in Unearned Revenue requires a credit entry.
g. To decrease Prepaid Insurance (debit): Prepaid Insurance is an asset, and a decrease in assets requires a debit entry.
h. To increase Notes Payable (debit): Notes Payable is a liability, and an increase in liability requires a debit entry.
i. To decrease Accounts Receivable (credit): Accounts Receivable is an asset, and a decrease in assets requires a credit entry.
j. To increase Owner Capital (credit): Owner Capital is part of owner's equity, and an increase in owner's equity requires a credit entry.
QS 2-5 - Identifying normal balance:
a. Office supplies (Debit - correct): Office supplies are considered an asset and have a normal debit balance.
b. Owner Withdrawals (Credit - incorrect): Owner Withdrawals actually have a normal debit balance, not credit.
c. Fees Earned (Debit - incorrect): Fees Earned is a revenue account and has a normal credit balance, not debit.
d. Wages Expense (Credit): Wages Expense has a normal debit balance, not credit.
e. Cash (Debit - correct): Cash is an asset and has a normal debit balance.
f. Prepaid Insurance (Credit - incorrect): Prepaid Insurance is an asset and has a normal debit balance, not credit.
g. Wages Payable (Credit - incorrect): Wages Payable is a liability and has a normal debit balance, not credit.
h. Building (Debit - correct): Buildings are considered assets and have a normal debit balance.