Identify the option which is according to the rules of debit and credit for balance sheet accounts.

Question

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 1STQ

To determine

Identify the option which is according to the rules of debit and credit for balance sheet accounts.

Expert Solution & Answer

Explanation of Solution

Journal entry:

Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Accounting rules for Journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Justification for Incorrect answers:

Option a:

Increase in liability and owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Option b:

Decrease in liability accounts are recorded by debits. Hence, this is the incorrect answer.

Option c:

Increase in owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Justification for Correct answers:

When liability and owners’ accounts are decreased, they are recorded by debits. Hence, the option which is correct is Option d. Decreases in liability and owners’ equity accounts are recorded by debits.

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Students have asked these similar questions

Finn's Furniture has accounts receivable of $5,280, inventory of $2,100, sales of $152,000, and cost of goods sold of $75,600. How many days does it take the firm to sell its inventory and collect the payment on the sale assuming all sales are on credit?

Carlton Enterprises has the following data

Finn's Furniture has accounts receivable of $5,280, inventory of $2,100, sales of $152,000, and cost of goods sold of $75,600. How many days does it take the firm to sell its inventory and collect the payment on the sale assuming all sales are on credit? Need help

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 1STQ

To determine

Identify the option which is according to the rules of debit and credit for balance sheet accounts.

Expert Solution & Answer

Explanation of Solution

Journal entry:

Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Accounting rules for Journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Justification for Incorrect answers:

Option a:

Increase in liability and owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Option b:

Decrease in liability accounts are recorded by debits. Hence, this is the incorrect answer.

Option c:

Increase in owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Justification for Correct answers:

When liability and owners’ accounts are decreased, they are recorded by debits. Hence, the option which is correct is Option d. Decreases in liability and owners’ equity accounts are recorded by debits.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 1STQ

To determine

Identify the option which is according to the rules of debit and credit for balance sheet accounts.

Expert Solution & Answer

Explanation of Solution

Journal entry:

Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Accounting rules for Journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Justification for Incorrect answers:

Option a:

Increase in liability and owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Option b:

Decrease in liability accounts are recorded by debits. Hence, this is the incorrect answer.

Option c:

Increase in owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Justification for Correct answers:

When liability and owners’ accounts are decreased, they are recorded by debits. Hence, the option which is correct is Option d. Decreases in liability and owners’ equity accounts are recorded by debits.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 1STQ

To determine

Identify the option which is according to the rules of debit and credit for balance sheet accounts.

Expert Solution & Answer

Explanation of Solution

Journal entry:

Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Accounting rules for Journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Justification for Incorrect answers:

Option a:

Increase in liability and owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Option b:

Decrease in liability accounts are recorded by debits. Hence, this is the incorrect answer.

Option c:

Increase in owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Justification for Correct answers:

When liability and owners’ accounts are decreased, they are recorded by debits. Hence, the option which is correct is Option d. Decreases in liability and owners’ equity accounts are recorded by debits.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 3, Problem 1STQ

To determine

Identify the option which is according to the rules of debit and credit for balance sheet accounts.

Expert Solution & Answer

Explanation of Solution

Journal entry:

Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Accounting rules for Journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Justification for Incorrect answers:

Option a:

Increase in liability and owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Option b:

Decrease in liability accounts are recorded by debits. Hence, this is the incorrect answer.

Option c:

Increase in owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Justification for Correct answers:

When liability and owners’ accounts are decreased, they are recorded by debits. Hence, the option which is correct is Option d. Decreases in liability and owners’ equity accounts are recorded by debits.

Answer 6

Chapter 3, Problem 1STQ

To determine

Identify the option which is according to the rules of debit and credit for balance sheet accounts.

Expert Solution & Answer

Explanation of Solution

Journal entry:

Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Accounting rules for Journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Justification for Incorrect answers:

Option a:

Increase in liability and owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Option b:

Decrease in liability accounts are recorded by debits. Hence, this is the incorrect answer.

Option c:

Increase in owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Justification for Correct answers:

When liability and owners’ accounts are decreased, they are recorded by debits. Hence, the option which is correct is Option d. Decreases in liability and owners’ equity accounts are recorded by debits.

Answer 7

Chapter 3, Problem 1STQ

To determine

Identify the option which is according to the rules of debit and credit for balance sheet accounts.

Answer 8

Expert Solution & Answer

Explanation of Solution

Journal entry:

Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Accounting rules for Journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Justification for Incorrect answers:

Option a:

Increase in liability and owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Option b:

Decrease in liability accounts are recorded by debits. Hence, this is the incorrect answer.

Option c:

Increase in owners’ equity accounts are recorded by credits. Hence, this is the incorrect answer.

Justification for Correct answers:

When liability and owners’ accounts are decreased, they are recorded by debits. Hence, the option which is correct is Option d. Decreases in liability and owners’ equity accounts are recorded by debits.