Question

Under what part of The Accounting Equation are Prepaid Expenses listed under?

Under what section The Accounting Equation are Revenue accounts listed under?

How are Revenue accounts increased, debit or credit?

Answer 1

• Accounting Equation: ASSETS = LIABILITIES + EQUITY [Stockholder’s/Owner’s]
• Question 1

--Under Accounting Equation, Prepaid Expenses are listed under ASSETS [Current Asset]. This is because Prepaid Expenses are current assets, which are to be expired as expense in Income Statement in recent period. Prepaid Expense have a debit balance.

• Question 2

--Under Accounting Equation, Revenue accounts are listed under Owner’s Equity section. Equity section includes retained Earnings which is affected by Income Statement’s revenue and expenses.

• Question 3

--Revenue accounts are Increased by CREDIT.

--This is because revenue accounts have normal credit balance, and they are increased when credited, and decreased when debited.