E2-12 Identifying accounts, increases in accounts, and normal balances a. Intere
ID: 2332485 • Letter: E
Question
E2-12 Identifying accounts, increases in accounts, and normal balances a. Interest Revenuc b. Accounts Payable c. Calhoun, Capital d. Office Supplies e. Advertising Expense Requirements 1. Identify each account as asset (A), liability (1), or equity (E). 2. Identify whether the account is increased with a debit (DR) or credit (CR) 3. Identify whether the normal balance is a debit (DR) or credit (CR) f. Unearned Revenue g Prepaid Rent h. Utilities Expense i. Calhoun, Withdrawals i. Service RevenueExplanation / Answer
Requirement 1
Identification of Account
Type of Account
a
Interest revenue
b
Accounts payable
Liability
c
Calhoun, Capital
Equity
d
Office Supplies
Asset *
e
Advertising Expense
f
Unearned revenue
Liability
g
Prepaid rent
Asset
h
Utilities Expense
i
Calhoun, Withdrawals
Equity
j
Service revenue
*Assumption:: It is assumed that office supplies is an asset first and then transferred to expense when supplies are used. When supplies are used then supplies expense is debited and office supplies is credited.
Requirement 2
Increase or decrease of accounts
Increased by
a
Interest revenue
Cr
b
Accounts payable
Cr
c
Calhoun, Capital
Cr
d
Office Supplies
Dr
e
Advertising Expense
Dr
f
Unearned revenue
Cr
g
Prepaid rent
Dr
h
Utilities Expense
Dr
i
Calhoun, Withdrawals
Dr
j
Service revenue
Cr
Requirement 3
Normal Balance of Accounts
Normal balance
a
Interest revenue
Cr
b
Accounts payable
Cr
c
Calhoun, Capital
Cr
d
Office Supplies
Dr
e
Advertising Expense
Dr
f
Unearned revenue
Cr
g
Prepaid rent
Dr
h
Utilities Expense
Dr
i
Calhoun, Withdrawals
Dr
j
Service revenue
Cr
Additional information for Requirement 1
There are many accounts which are neither asset nor equity or liability but are revenues or expense accounts
Type of Account
a
Interest revenue
Revenue
b
Accounts payable
Liability
c
Calhoun, Capital
Equity
d
Office Supplies
Asset
e
Advertising Expense
Expense
f
Unearned revenue
Liability
g
Prepaid rent
Asset
h
Utilities Expense
Expense
i
Calhoun, Withdrawals
Equity
j
Service revenue
Revenue
Requirement 1
Identification of Account
Type of Account
a
Interest revenue
b
Accounts payable
Liability
c
Calhoun, Capital
Equity
d
Office Supplies
Asset *
e
Advertising Expense
f
Unearned revenue
Liability
g
Prepaid rent
Asset
h
Utilities Expense
i
Calhoun, Withdrawals
Equity
j
Service revenue
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