Question

In this chapter we were provided a chart of accounts with sixteen accounts in exhibit 2 in the text.

From that chart of accounts select an account (try to pick one that has not been discussed yet), in the subject box put the account title you selected, then do the following:

1. Assets, Liabilities, Owner's Equity, Revenues, and Expenses are the five categories (account types) that an account can be classified as. Which category is the account you selected included in?

2. The double-entry accounting system has specific rules for recording debits and credits based on the type of account. Describe how these rules apply to the account you selected. How is the account increased and how is it decreased?

3. The normal balance of an account can be either a debit or a credit depending on whether increases in the account are recorded as debits or credits. What is the normal balance of the account you selected?

4. Think of a transaction that your account would be used in. Do not copy an entry from the book. Describe and illustrate journalizing the transaction, in the proper journal entry format.

Answer 1

Solution

1. Suppose we can select Accounts Receivable, it comes under the assets heading.
2. When the goods are sold on credit then accounts receivable account comes in existence that is debited for credit sales instead of cash like in ash sales.
3. Accounts the receivable balance is usually debit.
4. Suppose the goods are sold on credit to Evan and company worth $500

In that case the Journal Entry for the transaction will be:

The Particulars	Debit	Credit
The Accounts Receivable-Evan and Co.	$500
Sales		$500