Account Balance Calculation
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Questions and Answers

What is the purpose of double-entry accounting?

  • To record transactions without any balances
  • To record transactions using only one account
  • To ensure equal debits and credits for every transaction (correct)
  • To calculate account balances without debits and credits

In double-entry accounting, how are assets affected?

  • Assets are unaffected by transactions
  • Assets are decreased with debits
  • Assets are always increased with credits
  • Assets are increased with debits and decreased with credits (correct)

Which side of an account represents a decrease for liabilities?

  • Neither side
  • Both sides equally
  • Debit side
  • Credit side (correct)

When calculating account balance, what is done with the amounts on the credit side?

<p>They are added (C)</p> Signup and view all the answers

What is the normal balance for an account where increases are recorded on the credit side?

<p>Credit side (C)</p> Signup and view all the answers

How do equal debits and credits affect the accounting equation?

<p>Keep it in balance (B)</p> Signup and view all the answers

Which account type represents money owed by the company to its suppliers?

<p>Liabilities (B)</p> Signup and view all the answers

What is the purpose of a trial balance?

<p>To determine if total debits equal total credits (D)</p> Signup and view all the answers

In accounting, when Rent Expense increases, which action is needed in terms of debits and credits?

<p>Debit (D)</p> Signup and view all the answers

What is the main purpose of journalizing?

<p>To identify accounts and enter financial information (B)</p> Signup and view all the answers

Which of the following account types would typically have a credit normal balance?

<p>Liabilities (D)</p> Signup and view all the answers

Which account has a normal credit balance?

<p>Notes Payable (C)</p> Signup and view all the answers

If a company wants to decrease its Accounts Payable, what action is required in terms of debits and credits?

<p>Credit (B)</p> Signup and view all the answers

When Withdrawals increase, should the corresponding entry be a debit or a credit?

<p>Debit (C)</p> Signup and view all the answers

In the trial balance provided, which account has a debit balance?

<p>Supplies (D)</p> Signup and view all the answers

What does the posting process involve?

<p>Transferring information to the general ledger (D)</p> Signup and view all the answers

What type of balance does an increase in Assets typically have in terms of debits and credits?

<p>Debit (C)</p> Signup and view all the answers

Which statement is true about credits in accounting?

<p>Credits increase assets (D)</p> Signup and view all the answers

Flashcards

Double-Entry Accounting

A system where every transaction is recorded with equal debits and credits, ensuring the accounting equation always balances.

Assets in Double-Entry

Assets increase when a debit is recorded and decrease when a credit is recorded.

Liabilities Decrease

Liabilities decrease when a credit is recorded.

Credit Side Calculation

When calculating an account balance, the amounts on the credit side are added together.

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Normal Credit Balance

Accounts that increase with credits have a normal credit balance.

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Debit and Credit Balance

Equal debits and credits maintain the balance of the accounting equation: Assets = Liabilities + Equity.

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Liabilities

Accounts representing money owed by the company to its suppliers.

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Trial Balance

A summary of all the account balances, used to verify if the total debits equal the total credits.

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Rent Expense Increase

When Rent Expense increases, a debit is recorded.

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Journalizing

Journalizing records financial information and identifies specific accounts to be debited or credited.

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Credit Normal Balance

Accounts like liabilities, equity, and revenue typically have a normal credit balance.

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Notes Payable

Notes Payable, a debt owed to a lender, has a normal credit balance.

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Decreasing Accounts Payable

To decrease Accounts Payable (money owed to suppliers), a credit is recorded.

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Withdrawals Increase

Withdrawals, which are amounts taken out by the owner, are recorded as debits when they increase.

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Supplies Account Balance

In a trial balance, the Supplies account has a debit balance.

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Posting Process

The posting process transfers financial details from the journal to the general ledger.

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Assets Increase

An increase in Assets is typically represented by a debit.

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Credits Increase Assets

Credits typically increase assets in accounting.

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