Question

he following table summarizes the rules of debit and credit. Indicate whether the proper answer is a debit or a credit.

Line Item Description Increase Decrease Normal Balance
Balance sheet accounts:
Asset
Credit
Liability Credit

Stockholders' equity:
Common Stock Credit

Retained Earnings

Credit
Dividends Debit Credit
Income statement accounts:
Revenue

Credit
Expense
Credit Debit

Answer 1

Based on the rules of debit and credit for the different types of accounts in accounting, here is how the various line items are categorized:

1. **Asset**
- Increase: Debit
- Decrease: Credit
- Normal Balance: Debit

2. **Liability**
- Increase: Credit
- Decrease: Debit
- Normal Balance: Credit

3. **Stockholders' equity:**
- Common Stock
- Increase: Credit
- Decrease: Debit
- Normal Balance: Credit
- Retained Earnings
- Increase: Credit
- Decrease: Debit
- Normal Balance: Credit
- Dividends
- Increase: Debit
- Decrease: Credit
- Normal Balance: Debit

4. **Income statement accounts:**
- Revenue
- Increase: Credit
- Decrease: Debit
- Normal Balance: Credit
- Expense
- Increase: Debit
- Decrease: Credit
- Normal Balance: Debit

To accurately summarize the accounting rules:

- **Assets**: Increase with **Debit**, Decrease with **Credit**.
- **Liabilities**: Increase with **Credit**, Decrease with **Debit**.
- **Common Stock**: Increase with **Credit**, Decrease with **Debit**.
- **Retained Earnings**: Increase with **Credit**, Decrease with **Debit**.
- **Dividends**: Increase with **Debit**, Decrease with **Credit**.
- **Revenue**: Increase with **Credit**, Decrease with **Debit**.
- **Expenses**: Increase with **Debit**, Decrease with **Credit**.

Keep in mind that the **normal balance** indicates the side of the account that should carry a balance typically, so:

- Asset accounts have a normal balance of **Debit**.
- Liability and Stockholders' equity (e.g., Common Stock, Retained Earnings) accounts have a normal balance of **Credit**.
- Dividends and Expense accounts have a normal balance of **Debit**.
- Revenue accounts have a normal balance of **Credit**.