Exam 3: The Double-Entry Framework

A debit

Accounts that affect owner's equity are

A purchase of an asset on account

Match the terms with the definitions. -The normal balance of liability,owner's equity,and revenue accounts.

Revenues decrease owner's equity.

A credit

Prepaid Insurance is an asset account.

Increases are entered on the credit side of a(n)

The ____________________ balance is on the side that increases an account.

Liability accounts normally have debit balances.

Record the following transactions in the T accounts below.Indicate next to each entry the number for that transaction.After all transactions have been recorded,foot the accounts where necessary and enter the balances in the proper places.Prepare a trial balance for Douglas Distinctive Services as of December 31,20--. ​ 1. Mr. Douglas invested $\$ 25,000$ cash in the business. 2. Purchased equipment worth $\$ 7,000$ with a $\$ 500$ down payment. The remainder is due in 30 days. 3. Paid $\$ 900$ cash for a six-month insurance policy. 4. Received $\$ 3,000$ cash from customers for services rendered. 5. Paid wages, $\$ 1,750$ . 6. Received and paid advertising bill of $\$ 100$ . 7. Performed services worth $\$ 2,500$ for credit customers. 8. Received $\$ 1,700$ cash from customers previously billed on account. 9. Mr. Douglas withdrew $\$ 5,300$ cash for personal use. 10. Paid utility bill, $\$ 205$ . ​ Cash ​ Accounts Receivable ​ Prepaid Insurance ​ Equipment ​ Accounts Payable ​ Douglas, Capital ​ Douglas, Drawing ​ Repair Fees ​ Wages Expense ​ Advertising Expense Utilities Expense

Footings in T accounts

Mandy withdraws $600 from her business.This transaction increases cash but decreases owner's equity.

John received $350 for delivery services; this transaction increased Cash and revenue.