Chapter 4 Accounting Information Systems 209Sasquatch.com
Statement of Accounts
December 31, 2006Cash 4,100
Billings Due from Others 30,150
Supplies (chemicals, etc.) 14,950
Trucks 52,750
Equipment 16,150
Amounts Owed to Others 5,700
Investment in Business 47,000
Service Revenue 147,300
Wages Expense 60,100
Utilities Expense 14,660
Rent Expense 4,800
Insurance Expense 1,400
Other Expenses 940
200,000 200,000ANSWERS TO SELF-STUDY QUESTIONS
- A A debit may signify an increase in an asset account
(answer A) or a decrease in a liability or capital stock account.
A credit may signify a decrease in an asset account (answer
B) or an increase in a liability or capital stock account (answers
C and D). - C Liability, capital stock, and revenue (answer C) ac-
counts have normal credit balances. Asset (answer A), divi-
dends (answer B), and expense (answer D) accounts have
normal debit balances. - C Accounts Receivable (answer A), Cash (answer B),
and Miscellaneous Expense (answer D) would all normally
have debit balances. Fees Earned should normally have a
credit balance. Hence, a debit balance in Fees Earned (answer
C) would indicate a likely error in the recording process.- B The entry to close the dividends account is to debit
the retained earnings account and credit the dividends account
(answer B). - D Since all revenue and expense accounts are closed at
the end of the period, Fees Earned (answer A), Wages Expense
(answer B), and Rent Expense (answer C) would all be closed
to Retained Earnings. Accumulated Depreciation (answer D)
is a contra asset account that is not closed.