Q2SE - Horngren'S Financial And Managerial Accounting

Question

Identifying increases and decreases in accounts For each account, identify whether the changes would be recorded as a debit (DR) or credit (CR). a. Increase to Accounts Receivable b. Decrease to Unearned Revenue c. Decrease to Cash d. Increase to Interest Expense e. Increase to Salaries Payable f. Decrease to Prepaid Rent g. Increase to Common Stock h. Increase to Notes Receivable i. Decrease to Accounts Payable j. Increase to Interest Revenue

Step-by-Step Solution

Answer

Identification of debit or credit

Changes	Debit or Credit
Increase to Accounts Receivable	Debit (Dr)
b.  Decrease to Unearned Revenue	Debit (Dr)
c. Decrease to Cash	Credit (Cr)
d. Increase to Interest Expense	Debit (Dr
e. Increase to Salaries Payable	Credit (Cr)
f. Decrease to Prepaid Rent	Credit (Cr)
g. Increase to Common Stock	Credit (Cr)
h. Increase to Notes Receivable	Debit (Dr)
i. Decrease to Accounts Payable	Debit (Dr)
j. Increase to Interest Revenue	Credit (Cr)

Step 1: Definition of Accounts Receivables

The Accounts receivables are defined as the balance sheet item representing any amount owed to the business.

Step 2: Changes recorded as debited when

An account is debited when there is an increase in assets, expenses and a decrease in capital, revenues, and liabilities.

Step 3: Changes recorded as credited when

An account is credited when there is a decrease in assets, expenses and an increase in capital, revenues, and liabilities.