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

Question

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.