Just like your homework problems, it's important to understand the "why" behind the answer, even if you answer the question correctly. A. The only time a company provides to the customer (revenue) and uses up an asset (expense) is when the company provides goods to the customer. Sales (revenue) and cost of goods sold (expense) are recorded in the same transaction.
Journal Entry for Purchasing an Asset
However, after the financial statements for the year are prepared the current year net income and draws will be transferred to this account. B. Accumulated depreciation is the account that is always credited when recording depreciation expense. This account is the total of all prior years’ depreciation expense. Accumulated depreciation is a contra asset account which means it is opposite of an asset. Assets increase with a debit, so accumulated depreciation is increased with a credit (opposite).
Bookkeeping
After recording the transactions,prepare a “T account” and balance the cash account. B. introduction to bonds payable Owing a supplier is called accounts payable. Cash is credited when payment is made.
Balance Sheet
The amount of insurance that was incurred/used up/expired during the period of time appearing in the heading of the income statement. The amount of insurance premiums that have not yet expired should be reported in the current asset account Prepaid Insurance. A current asset which indicates the cost of the insurance contract (premiums) that have been paid in advance. It represents the amount that has been paid but has not yet expired as of the balance sheet date.
- Prepaid insurance is an asset and assets increase with a debit.
- Dividends paid are not a revenue or an expense and are never recorded on the income statement.
- An expense occurs when an asset is used up.
- Asset and expense accounts will have a debit balance.
- B. Cash and the liability both decrease.
(c.) occurs when the company purchases its own stock. A. The expense must be paid for now or paid for later. The expense is a debit, so the other account must be a credit.
C. Inventory is an asset which is debited when it increases. Increases in inventory occur when it is purchased and received. C. This is an increase in the asset, prepaid expense. Increasing an asset is recorded with a debit. A. This is an increase to prepaid insurance. Prepaid insurance is an asset and assets increase with a debit.
The customer does not pay for goods providedd. The total of the Debit column of the trial balance will exceed the total of the Credit column by $13,000. Auto-grading quizzes and tests with detailed stats and reports. Create quizzes and tests automatically from your content using AI.
When we owe our suppliers, we call them accounts payable (or creditors). Accounts payable represent the value of these debts that we owe. It should – we have been doing these basic accounting journal entries throughout the previous section on double-entry accounting. In this lesson we're going to learn exactly what a journal is and what it looks like, and we'll go over the basic accounting journal entries you need to know. When students start working with me, we focus on solving accounting practice questions. These questions change how you think about accounting and change your approach to answering the questions you'll see on your accounting tests and quizzes.
There are roughly ten common transactions that occur repeatedly in accounting, each of which has a different journal entry. As I'm sure you know, there is a lot of information to learn for your accounting class. My my goal is to help you pass your accounting class, so if you need help, reach out to me! I have more practice tests and practice quizzes like the ones above.
C. Making a payment is a decrease to cash and a decrease to an asset is recorded with a debit (not one of the choices). Paying amounts owed is a decrease to a liability which is recorded with a debit. Amounts owed to suppliers is accounts payable.