Exercise and problem Essay Example

13Insert surname here

Accounting

Exercise 3.2

Type of account affected

Increase/ decrease of account

Debit/ credit

  1. Owner invested cash

Equity account

Increase

  1. Paid creditor by electronic transfer

Liability

Decrease

  1. Cash payment made for insurance 6 months in advance

Increase

  1. Purchased supplies on credit

Liability

Increase

  1. Sold a vehicle for cash

Decrease

  1. Invoiced a customer for services performed

Increase

  1. Owner withdrew from business for private use

Decrease

  1. Received payment on an account receivable

Decrease

  1. Paid cash and took out a loan to purchase machinery

Increase

  1. Paid for an advertisement

Increase

Exercise 3.1

Categories

The way an increase is recorded

Normal balance

Accounts receivable

Interest

Cash at bank

Accounts payable

liability

Inventory

Investments

Motor vehicles

Mortgage payable

Liability

Exercise 3.3

Ledger accounts

flashlights

flashlights

Equipment

creditors

Equipment

advertising

Expenses

advertising

Trial balance

Trial balance

creditors

0

Expenses