Understanding Debits and Credits

A business purchases office supplies for cash. Using T-accounts, which accounts are affected and how are they recorded?

• Debit Office Supplies, Credit Cash

• Debit Cash, Credit Office Supplies

• Debit Office Supplies, Credit Accounts Payable

• Debit Accounts Payable, Credit Cash

If a company receives cash from a customer for a previous sale on account, how should this transaction be recorded in T-accounts?

• Debit Accounts Receivable, Credit Cash

• Debit Cash, Credit Accounts Receivable

• Debit Sales, Credit Cash

• Debit Cash, Credit Sales

A business pays rent expense in cash. Which T-accounts are affected and what are their entries?

• Debit Rent Expense, Credit Cash

• Debit Cash, Credit Rent Expense

• Debit Rent Expense, Credit Accounts Payable

• Debit Accounts Payable, Credit Cash

Which of the following correctly shows the normal balance side for the following accounts: Assets, Liabilities, and Owner’s Equity?

• Assets (Credit), Liabilities (Debit), Owner’s Equity (Debit)

• Assets (Debit), Liabilities (Credit), Owner’s Equity (Credit)

• Assets (Credit), Liabilities (Credit), Owner’s Equity (Debit)

• Assets (Debit), Liabilities (Debit), Owner’s Equity (Credit)

A company provides services to a customer and receives cash immediately. How should this transaction be recorded using T-accounts?

• Debit Service Revenue, Credit Cash

• Debit Cash, Credit Service Revenue

• Debit Accounts Receivable, Credit Service Revenue

• Debit Cash, Credit Accounts Payable

If a business owner invests additional cash into the business, which T-accounts are affected and how?

• Debit Owner’s Equity, Credit Cash

• Debit Cash, Credit Owner’s Equity

• Debit Cash, Credit Revenue

• Debit Revenue, Credit Cash

A company pays a utility bill with cash. Which accounts are debited and credited in the T-accounts?

• Debit Utilities Expense, Credit Cash

• Debit Cash, Credit Utilities Expense

• Debit Utilities Expense, Credit Accounts Payable

• Debit Accounts Payable, Credit Cash

Which of the following transactions would increase both an asset and a liability account?

• Purchasing equipment for cash

• Borrowing money from a bank

• Paying off a loan

• Receiving cash from a customer

A business purchases inventory on account. How should this be recorded in T-accounts?

• Debit Inventory, Credit Accounts Payable

• Debit Accounts Payable, Credit Inventory

• Debit Inventory, Credit Cash

• Debit Cash, Credit Inventory

Which of the following best describes the normal balance of an expense account?

• Credit

• Debit

• Both debit and credit

• Neither debit nor credit