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Identifying Increases and Decreases in Accounts Ronald Hicks uses these accounts in his
Chapter 5, Problem 5-3(choose chapter or problem)
Identifying Increases and Decreases in Accounts
Ronald Hicks uses these accounts in his business, Wilderness Rentals.
Instructions Analyze each of the following transactions using the format shown in the example below. Record your answers in your working papers.
a. Explain the debit.
b. Explain the credit.
Example:
On Jan. 2 Ronald Hicks paid the bill for office cleaning, $100.
a. The expense account 505 Maintenance Expense is increased. Increases in expenses are recorded as debits.
b. The asset account 101 Cash in Bank is decreased. Decreases in assets are recorded as credits.
Calculate the amount of increase or decrease in the Cash in Bank account.
Questions & Answers
QUESTION:
Identifying Increases and Decreases in Accounts
Ronald Hicks uses these accounts in his business, Wilderness Rentals.
Instructions Analyze each of the following transactions using the format shown in the example below. Record your answers in your working papers.
a. Explain the debit.
b. Explain the credit.
Example:
On Jan. 2 Ronald Hicks paid the bill for office cleaning, $100.
a. The expense account 505 Maintenance Expense is increased. Increases in expenses are recorded as debits.
b. The asset account 101 Cash in Bank is decreased. Decreases in assets are recorded as credits.
Calculate the amount of increase or decrease in the Cash in Bank account.
ANSWER:Step 1 of 2
Assets are the resources purchased by a business entity for establishing ownership rights. These are acquired to generate future benefits. Asset accounts are permanent accounts in nature and removed from the business when they are sold. Asset accounts include cash account, equipment account, accounts receivables account, plant and machinery account and many more.