LO 3.2State the accounting equation, and explain what each part represents.
LO 3.2Does every transaction affect both sides of the accounting equation? Explain your answer.
LO 3.4What is the effect on the accounting equation when a business purchases supplies on account?
LO 3.4Is it still necessary to record a transaction if it has no net effect on the accounting equation? Explain your answer.
LO 3.5What do the terms “debit” and “credit” mean?
LO 3.5What types of accounts will increase with a credit?
LO 3.5Why is a journal referred to as the “book of original entry”?
LO 3.5What are the rules you should follow when recording journal entries?
LO 3.5Explain the steps in posting.
LO 3.5Explain normal balances. Give three examples of accounts that will normally have a debit balance and three accounts that will normally have a credit balance.
LO 3.5What is an unearned account? What type of account is it?
LO 3.5Can a credit entry be described as a generally positive or negative transaction? Explain.
LO 3.5What types of accounts are increased with a credit?
LO 3.5Does the order in which financial statements are prepared matter?