*Debit and Credits* Flashcards
Be able to recognize which accounts are affected by certain transactions.
Company borrows $1,000 from bank
Cash is debited Notes Payable is credited
Company repays $1,000 borrowed from bank
Notes Payable is debited Cash is credited
Company receives $500 on June 3rd from customer who was given 30 days to pay (recorded sales and accounts receivable in May)
Cash is debited Accounts receivable is credited
Company paid $300 on June 4th to supplier for merchandise the company received in May (recorded purchase and accounts payable) .
Accounts Payable-debited Cash-credited
Company performed service which was immediately paid in full
Cash is debited Service Revenues credited
Company performs $400 of services on credit (time service is performed)
Accounts Receivable is debited Service Revenues is credit
Company paid $800 on June 1st to landlord for June rent
Rent Expense debited Cash credited
Company paid $800 rent on June 1st for July rent.
Prepaid Rent debited Cash credit
Company pays hourly employees for completed but not paid until later.
Wages Expense debited Wages Payable debited
Permanent Accounts
accounts not closed as the end of the accounting year
balances carry over to next year
Example of Permanent Accounts
Assets, Liabilities, some Owner’s Equity
Temporary Accounts (Nominal Accounts)
revenue, expense, drawing, and income summary accounts
“zeroed out” and closed at the end of accounting year
