Complete the following table, which summarizes the rules for Debits and Credits. Place the word “Debit” or “Credit” in each blankChapter 2 Discussion Questions
1. What are the Learning Objectives for this chapter?
2. Name seven assets.
3. Name three liabilities.
4. Name the four types of Owner’s Equity accounts.
5. If you saw an account with the number 201, what type of account would that be? What are the rules for numbering the account?
6. Is an increase in an account ALWAYS recorded with a debit? Explain.
7. Complete the following table, which summarizes the rules for Debits and Credits. Place the word “Debit” or “Credit” in each blank.
Assets Liabilities Owner’s Equity
Increase in Asset_________ Increase in Liab._______ Investment by Owner _______
Decrease in Asset________ Decrease in Liab.______ Withdrawal by Owner _______
Revenue is Earned _______
Expense is Incurred _______
8. Indicate the normal balance of each of the following accounts. Hint: what makes each account increase?
a. Cash _______
b. Accounts Payable _______
c. Johnson, Capital _______
d. Johnson, Drawing _______
e. Service Revenue _______
f. Rent Expense _______
9. Debits increase asset accounts, but liabilities and owner’s equity accounts are increased with credits. Why do you think that that liabilities and OE accounts have the same rules for debit and credit?
10. The Accounting Cycle. Use the numbers 1-4 to indicate the order in which each step of the Accounting Cycle is performed.
a. _____ Post each transaction from the journal to the ledger
b. _____ Prepare a trial balance.
c. _____ Analyze each transaction.
d. _____ Record each transaction in a journal.
11. Which account would get debited and which account would get credited in each of these transactions?
a. The Owner invested $10,000 cash in the business.
b. Supplies were purchased on account, in the amount of $3,000.
c. We paid rent in cash, $1,000.
d. We provided services to a client, on account, $4,000.
12. Define each of the following:
d. Trial Balance
13. Is a trial balance the same exact thing as a balance sheet?
14. Darren Company started the month with a cash balance of $10,000. At the end of the month, the cash balance was $15,000. What was the percentage increase in the cash account? (Hint: compute the difference in cash and divide by the amount of cash at the beginning of the month.)
15. If the trial balance balances, does this mean that all transactions were correctly analyzed, journalized and posted? Why or why not?
16. Linda prepared the trial balance and found that the debit total and the credit total were out of balance. The difference between the debit side and the credit side was $3600. Is it possible that a slide or transposition error occurred? Explain.
17. Fill in the blanks. The posting reference in the journal is the _________ of the account to which the debit or credit was posted. In the ledger account, the posting reference points to the _______ of the page from which the posting came.
18. Do you have some questions about this chapter? Post them on the discussion board.