Essay about Chapter 2 – the Recording Process
Questions – 1-21, Pages 78-79 1. Describe the parts of a T account. T account consists of three parts: (1) a title, (2) a left or debit side, and (3) a right or credit side. Because the format of an account resembles the letter T, we refer to it as a T account. 2. “The terms debit and credit mean increase and decrease, respectively.” Do you agree? Explain.
I do not agree. We use the terms debit and credit repeatedly in the recording. Debit simply means that the amount is entered on the left side of the account, while the word Credit means that the amount is entered on the right hand. Depending on the transaction, debit or credit will be increased or in some cases it will be decreased. We cannot …show more content…
11. What are the advantages of using a journal in the recording process?
1. It discloses in one place the complete effects of a transaction.
2. It provides a chronological record of transactions.
3. It helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared.
12. (A) when entering a transaction in the journal, should the debit or credit be written first? The account to be debited is entered first at the extreme left margin of the column headed “Account Titles and Explanation,”
(b) Which should be indented, the debit or credit?
The account to be credited is indented.
13. Describe a compound entry, and provide an example. A compound journal entry may combine two or more debits and a credit, or a debit and two or more credits, or two or more of both debits and credits. An example of a compound entry is the purchase of a business vehicle purchased for $25,000 with $7,000 down and the remainder financed is recorded as a $25,000 debit to equipment, a $7,000 credit to cash and an $18,000 credit to loans payable. GENERAL JOURNAL |
07/14/2015 | Account Title and Explanation | Debit | Credit | | Equipment Cash