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Identifying Increases and Decreases in Accounts Alice Roberts uses the following
Chapter 4, Problem 4-2(choose chapter or problem)
Identifying Increases and Decreases in Accounts
Alice Roberts uses the following accounts in her business:
| General Ledger | |
| Cash in Bank | Office Equipment |
| Accounts Receivable | Accounts Payable |
| Office Furniture | Alice Roberts, Capital |
Instructions Analyze each of the following transactions. In your working papers, explain the debit and the credit. Use the format shown in the example.
Example:
On June 2 Alice Roberts invested $5,000 of her own money in a business called Roberts Employment Agency.
a.The asset account Cash in Bank is increased. Increases in asset accounts are recorded as debits.
b.The owner’s capital account Alice Roberts, Capital is increased. Increases in the owner’s capital account are recorded as credits.
| Date | Transactions |
| June 3 | 1. Purchased a computer on account from Computer Inc. for $2,500. |
| 9 | 2. Transferred a desk (Office Furniture) to the business. The desk is worth $750. |
| 15 | 3. Made a partial payment on account of $1,000 to Computer Inc. |
Questions & Answers
QUESTION:
Identifying Increases and Decreases in Accounts
Alice Roberts uses the following accounts in her business:
| General Ledger | |
| Cash in Bank | Office Equipment |
| Accounts Receivable | Accounts Payable |
| Office Furniture | Alice Roberts, Capital |
Instructions Analyze each of the following transactions. In your working papers, explain the debit and the credit. Use the format shown in the example.
Example:
On June 2 Alice Roberts invested $5,000 of her own money in a business called Roberts Employment Agency.
a.The asset account Cash in Bank is increased. Increases in asset accounts are recorded as debits.
b.The owner’s capital account Alice Roberts, Capital is increased. Increases in the owner’s capital account are recorded as credits.
| Date | Transactions |
| June 3 | 1. Purchased a computer on account from Computer Inc. for $2,500. |
| 9 | 2. Transferred a desk (Office Furniture) to the business. The desk is worth $750. |
| 15 | 3. Made a partial payment on account of $1,000 to Computer Inc. |
ANSWER:
Step 1 of 3
Accounts payable are referred to as those firms or suppliers to whom the business owes the amount. These are reported in the statement of financial position on the liability side and are also referred to as creditors of the business.