l o w in g pa rt s a th e t i t l e b th e le ft or de b i t si d e an d c th e

L o w in g pa rt s a th e t i t l e b th e le ft or

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l o w in g pa rt s : ( a) th e t i t l e , ( b ) th e le ft or de b i t si d e , an d ( c ) th e ri g h t or c r ed i t sid e . 2 . D i sa g r e e . Th e te r m s de b i t an d cr ed i t m ea n le ft an d ri g h t re s p e ct i v e l y. 3. John is incorrect. The double-entry system merely records the dual effect of a transaction on the accounting equation. A transaction is not recorded twice; it is recorded once, with a dual effect. 4. Kathy is incorrect. A debit balance only means that debits amounts exceed credit amounts in an account. Conversely, a credit balance only means that credit amounts are greater than debit amounts in an account. Thus, a debit or credit balance is neither favorable nor unfavorable. 5 . ( a ) A s se t ac co u n t s ar e inc r e a s ed by de b i t s an d dec r e a s ed by cr e d i t s. ( b ) L i ab i l i t y ac c o un t s are de c re a s e d by de bi t s and in c re a s e d by cr ed i t s . ( c ) R e ve n u e s an d own e r ’ s ca p i t al ar e in c r e as e d by cr e d it an d de c r e as e d by de b i ts . E x pe n s e s an d ow n e r ’ s dr a w i ng ar e in c r e as e d by de b i ts an d de c r e as e d by cr e d it s . 6. (a) Accounts Receivable—debits balance. (b) Cash—debits balance. (c) Owner’s Drawing—debit balance. (d) Accounts Payable—credit balance. (e) Service Revenue—credit balance. (f) Salaries Expense—debit balance. (g) Owner’s Capital—credit balance. 7 . ( a ) A c co u n t s Re c e i va b l e — as s e t — de b i t ba l a n c e. (b) A c co u n t s Pa y a b le — l i a bi l i t y —c r e d i t ba l a nc e (c) E q ui p m e n t— a s s e t— d e b i t ba l a nc e . (d) O w ne r ’ s Dr a w i n g— o w n e r’ s eq ui t y — d eb i t bal a n c e . (e) S u pp l i e s —a s s e t —d e b i t ba l a n ce . 8 . ( a ) D e bi t Su pp l i e s an d cre d it Ac c ou n t s Pa y a b l e. (b) D e bi t Ca sh an d cr e d i t No t e s Pa y a bl e . (c) D e bi t Sa la r i e s Ex p e n se an d cr e d i t Ca s h . 9 . ( 1 ) C a sh — b o t h de b i t an d cr e d i t en t r i es . (2) A c co u n t s Re c e i va b l e — bo t h deb i t and cr e di t en tr i e s . (3) O w ne r ’ s Dr a w i n g— d e b i t en t r ie s on ly . (4) A c co u n t s Pa y a b le — b o t h de b i t an d cr e d i t en t r i es . (5) S a la r i e s Ex p e n se — d e b it s en tr i e s on l y . (6) S e rv i c e Re v e n u e— c r e d it en t ri e s onl y . 1 0 . T h e ba s i c st e p s in t he re c or d i n g pr o c e ss ar e : (1) A n al y z e ea c h t ra n s a c ti o n f or it s ef f e c t on t he ac c ou n t s . (2) E n te r t h e t r a n sa c t i o n in f o rm a t i o n in a jo u r n al ( b o ok of or i g i n al en t ry ) . (3) T r an s f e r t h e jou r n a l in f o r ma t i o n t o t h e ap p r op r i a t e ac c o un t s in t h e le d g e r ( b o o k of a c co u n t s ).
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2-5 Questions Chapter 2 (Continued) 1 1 . T h e ad v a nt a g e s of us in g t h e jo u r na l in th e r ec o r d i ng pr o ce s s are : (1) I t di s c l os e s in on e pl a c e th e co mp l e t e ef f e c ts of a t r a n sa c t i o n.
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