Question

QUESTION 6 State the rules of debit and credit as applied to (a) asset accounts, (b) liability accounts, and (c) the owner's equity accounts (revenue, expenses, owner's drawings, and owner's capital). TT T Arial 3 (12pt) - PES Path: P Words: 04 QUESTION 7 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. (a) The bookkeeper debited Cash for $600 and credited Salaries and Wages Expense for $600 for payment of wages. (b) Cash collected on account was debited to Cash for $900 and Service Revenue was credited for $90. What would you tell them?

Answer 1

(a) As there is a debit and its equal credit, the trail balance will be balanced but the accounting was completely wrong. When ever any expense is incurred, expense should be debited. So here, debit the salaries & wages expense and credit the cash.

(b) Here there is no proper debit for its credit. So trail balance will not be balanced. Even though the accounting is correct, the credit side will be short by $810. In order to balance it, increase the credit side by $810.