Question

1) What is the debit and credit formula for each account type?

2)What should be done before taking a deposit to the bank? (80–100 words)

3)List and briefly describe five errors that are typically made when processing financial transactions.

Answer 1

1)

Accounting Equation can be written as follows:

Assets = Liabilities + Equity

When asset increases, it is debited and when liabilities and equity increases it is credited and vice versa.

In the expanded form equity can be written as:

Equity= Paid in Capital + Revenues – Expenses – Dividends – Treasury Stock

Since the increase in Equity is credited, therefore increase in Paid in Capital and Revenue is credited whereas

increase in Expenses, Dividends, and Treasury Stock is debited.