Question

Identifying type and normal balances of accounts Lo C4 For each of the following (1) identify the type of account as an asset, liability equity, revenue, or expense; (2) identify the normal balance of the account, and (3) select debit (Dr or credit (Cr) to identify the kind of entry that would increase the account balance.

Account Type of Account Normal Balance Increase (Dr. or C
a. Land
b. Cash
c. Legal Expense
d. Prepaid Insurance
e. Accounts Receivable
f. Dividends
g. License Fee Revenue
h. Uneaned Revenue
i. Fees Earned
j. Equipment
k. Notes Payable
l. Common Stock

Answer 1

a. Land - Asset, Debit, Dr

b. Cash - Asset, Debit, Dr

c. Legal Expense - Expense, Debit, Dr

d. Prepaid Insurance - Asset, Debit, Dr

e. Accounts Receivable - Asset, Debit, Dr

f. Dividends - Equity, Credit, Cr

g. License Fee Revenue - Revenue, Credit, Cr

h. Uneaned Revenue - Liability, Credit, Cr

i. Fees Earned - Revenue, Credit, Cr

j. Equipment - Asset, Debit, Dr

k. Notes Payable - Liability, Credit, Cr

l. Common Stock - Equity, Credit, Cr

Step-by-step explanation:

Assets, liabilities and equity are the elements of a balance sheet. These 3 elements form the accounting equation which is given as

Assets = Liabilities + Equity

Assets usually have a debit balance while equity and liabilities are usually credit balances. Expenses like assets usually have a debit balance while revenue usually has a credit balance.