Exercise 1D

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Exercise 1D

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Answers:

Exercise 1D Answers

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a) It's a liability, so any liability has to be credited.
b) Accounts Receivable, based on accrual basis accounting, this is a revenue that is expected, so it's a debit to assets.
c) Cash, always a debit to assets.
d) Capital Stock is an Owner's Equity account, this makes the owner richer (well, I guess not in today's economic climate, LOL), anyways, anything that enriches the owner will be a credit.
e) Dividends is an owner's equity that has the opposite effect of enriching the owner therefore, if credit enriches an owner, any cash outlay or decrease in owner's equity will have to be debited.
f) Equipment is an asset, therefore a debit to asset.
g) Fees Earned (aka Revenue), is always a credit.
h) Rent Expense, any expenses has the opposite effect of enriching the owner therefore debit the owner's equity account.
i) Salary Expense, once again the key word is "EXPENSE", thus decreasing the owner's equity, thus debiting the OE
j) Supplies is an asset and to increase assets, we must always debit.