Consider each of the accounts listed in the table below.Required: Indicate how the balance of each account will be increased and decreased by entering the word "Debit" or "Credit" into the appropriate column. AccountIncreased byDecreased by1)Accounts receivable??2)Service revenue??3)Common stock??4)Cash??5)Salaries expense??6)Notes payable??7)Dividends??8)Prepaid rent??
What will be an ideal response?
| Account | Increased by | Decreased by |
| 1)Accounts receivable | Debit | Credit |
| 2)Service revenue | Credit | Debit |
| 3)Common stock | Credit | Debit |
| 4)Cash | Debit | Credit |
| 5)Salaries expense | Debit | Credit |
| 6)Notes payable | Credit | Debit |
| 7)Dividends | Debit | Credit |
| 8)Prepaid rent | Debit | Credit |
1) Accounts receivable is an asset account.
2) Service revenue is a stockholders' equity account; a credit is used to record an increase in a revenue account since revenues increase net income and stockholders' equity (retained earnings).
3) Common stock is a stockholders' equity account.
4) Cash is an asset account.
5) Salaries expense is a stockholders' equity account; a debit is used to record an increase in an expense account since expenses decrease net income and stockholders' equity (retained earnings).
6) Notes payable is a liability account.
7) Dividends is a stockholders' equity account; a debit is used to record an increase in the dividends account since dividends decrease stockholders' equity (retained earnings).
8) Prepaid rent is an asset account.
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