Book 1 - Chapter 20

Reinforcement Problems
LG 20-1.


LG 20-2. The natural positive side of an account is an essential point of reference. When the natural positive side is agreed upon, then both the increases and decreases can be recorded in a consistent and accurate way. The natural positive side is used to: (1) record account increases; and (2) show account balances. The opposite side then becomes the side used for decreases.

LG 20-3.

	a.
		Increase/decrease: Cash increases and Accounts Receivable decreases.
		Description: The business collected $750 cash from customers who owed the business on account.
	b.
		Increase/decrease: Supplies increases and Accounts Payable increases.
		Description: The business purchased $1,000 of supplies on account (on credit).
	c.
		Increase/decrease: Cash decreases and Supplies increases.
		Description: The business purchased $500 of supplies for cash.
	d.
		Increase/decrease: Equipment increases, Cash decreases, and Notes Payable increases.
		Description: The business purchased $15,000 of equipment, paying $5,000 cash and signing a note payable for $10,000.

Learning Goal 20

SOLUTIONS

Learning Goal 20: Explain the Use of Accounts

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