Understanding Accounting Basics: Debits, Credits, and Transactions

Posted on Aug 7, 2025 in Accounting and Finance

Debit Normal Balance Question

A debit is not the normal balance for which of the following accounts?

• Asset account
• Dividends account
• Expense account
• Common Stock account

Journal Entry for Supplies Purchase

The purchase of supplies on account should result in:

• A debit to Accounts Payable and a credit to Supplies.
• A debit to Supplies and a credit to Accounts Receivable.
• A debit to Supplies and a credit to Accounts Payable.
• A debit to Cash and a credit to Supplies.

Sheldon Cooper Company: June Transactions Analysis

Transactions for the Sheldon Cooper Company, which provides welding services, for the month of June are presented below:

Identify Debits and Credits for Each Transaction

Identify the accounts to be debited and credited for each transaction:

		Account Debited		Account Credited
June 1		Accounts Payable Common Stock Rent Revenue Accounts Receivable Investment Equipment Service Revenue Cash Depreciation Expense Rent Expense		Rent Revenue Service Revenue Investment Cash Rent Expense Depreciation Expense Common Stock Equipment Accounts Payable Accounts Receivable
2		Common Stock Equipment Accounts Payable Rent Revenue Rent Expense Depreciation Expense Accounts Receivable Service Revenue Investment Cash		Depreciation Expense Service Revenue Rent Revenue Common Stock Accounts Payable Cash Equipment Accounts Receivable Rent Expense Investment
3		Accounts Payable Accounts Receivable Rent Expense Service Revenue Cash Rent Revenue Equipment Investment Common Stock Depreciation Expense		Common Stock Rent Revenue Investment Cash Equipment Rent Expense Depreciation Expense Accounts Payable Accounts Receivable Service Revenue
12		Common Stock Rent Revenue Equipment Rent Expense Accounts Receivable Service Revenue Depreciation Expense Investment Cash Accounts Payable		Accounts Receivable Cash Common Stock Depreciation Expense Service Revenue Rent Revenue Investment Equipment Rent Expense Accounts Payable

Unearned Service Revenue Account Classification

The Unearned Service Revenue account is a(n):

• Asset
• Liability
• Expense
• Revenue

Clooney Company: Trial Balance Calculation

The trial balance of Clooney Company had accounts with the following normal balances:

• Cash: $5,000
• Revenue: $85,000
• Salaries and Wages Payable: $4,000
• Salaries and Wages Expense: $40,000
• Rent Expense: $10,000
• Common Stock: $42,000
• Dividends: $15,000
• Equipment: $61,000

In preparing a trial balance, the total in the debit column is:

• $116,000
• $216,000
• $91,000
• $131,000

Solution Explanation

The total debit column totals $131,000. This is calculated as: $5,000 (Cash) + $40,000 (Salaries and Wages Expense) + $10,000 (Rent Expense) + $15,000 (Dividends) + $61,000 (Equipment). The normal balance for Assets, Expenses, and Dividends, is a debit.

Juan Kirby’s Accounting Information Flow

Juan Kirby is confused about how accounting information flows through the accounting system. He believes the flow of information is as follows:

1. Debits and credits posted to the ledger.
2. Business transaction occurs.
3. Information entered in the journal.
4. Financial statements are prepared.
5. Trial balance is prepared.

Is Juan correct?

Juan is not correct correct.

Trial Balance Balancing Scenarios

Two students are discussing the use of a trial balance. They wonder whether the following errors, each considered separately, would prevent the trial balance from balancing. What would you tell them?

Your answer is correct.

Scenario 1: Incorrect Account Debited/Credited

The bookkeeper debited Cash for $600 and credited Salaries and Wages Expense for $600 for payment of wages.

The trial balance would balance not balance.

Scenario 2: Incorrect Amount Credited

Cash collected on account was debited to Cash for $900 and Service Revenue was credited for $90.

The trial balance would balance not balance.