23. Debits A) B) C) D) increase both assets and liabilities. decrease both asset

Question

23. Debits A) B) C) D) increase both assets and liabilities. decrease both assets and liabilities. increase assets and decrease liabilities. decrease assets and increase liabilities. 24. Which of the following describes the classification and normal balance of the Unearned Rent Revenue account? A) Asset, debit B) Liability, credit C) Revenues, credit D) Expense, debit 25. Which of the following accounts is increased with a credit? A) Supplies Expense B) Supplies C) Sales Revenue D) Dividends 26. When a company performs a service but has not yet received payment, it A) debits Service Revenue and credits Accounts Receivable. B) debits Accounts Receivable and credits Service Revenue. C) debits Service Revenue and credits Accounts Payable. D) makes no entry until cash is received 27. In the financial statements, where should a liability account be presented? A) Income Statement. B) Balance Sheet. C) Retained Earnings Statement. D) Statement of Cash Flows. 28. In the first month of operations, the total of the debit entries to the Cash account amounted to $3,000 and the total of the credit entries to the Cash account amounted to $1,800. The Cash account has a A) $1,800 debit balance. B) $3,000 debit balance. C) S1,200 debit balance. D) $1,800 credit balance. Page 7

Explanation / Answer

23 Debits : C) Increase assets and decrease liabilities Assets have normally debit balance and liability have credit balance thus is asset is debited it increases its balance and its reverse in case of liability. 24 The following describes the classification and normal balance of unearned Rent Revenue: B) Liability , Credit Since its not earned it’s a liability and has credit balance. 25 The following is increased with credit: C) Sales Revenue Revenue has normally credit balance and thus it increases on crediting it. 26 When a company performs a service but has not yet received payment, it B) debits accounts Receivable and credits Service Revenue. 27 Liability account should be presented in B) balance sheet 28 The cash account has C) $1,200 debit balance

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