ACC1100 Lecture Notes - Lecture 2: Retained Earnings, Share Capital

Which of the following is not a correct rule of debits and credits?

a. The normal balance for revenues and expenses is a credit.

b. Liabilities, revenues, and stockholders' equity are increased by credits.

c. Assets, expenses, and dividends are increased by debits.

d. Assets are decreased by credits and have a normal debit balance.

What are the two fundamental equality requirements ofthe double-entry accounting system? efine debit andcredit and explain how assets, liabilities, commonstock, retained earnings, revenues, expenses, anddividends are affected by (increased or decreased)by debits and by credits.

Describe how the perpetual inventory system works.What are some advantages of using the perpetualinventory system? Is it necessary to take physicalinventory when using the perpetual system?