Multiple Choice
In the journal entry to issue shares for cash, which normal balance does the Common Stock account have and how is it recorded?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
In journal entries, a debit to Salaries Expense will:
A
Decrease liabilities
B
Decrease Salaries Expense
C
Increase Cash
D
Increase Salaries Expense
Verified step by step guidance1
Understand the nature of the Salaries Expense account: Salaries Expense is an expense account, and expenses increase with debits and decrease with credits.
Recall the basic accounting rule for expenses: Debiting an expense account increases the expense, while crediting it decreases the expense.
Analyze the effect of a debit to Salaries Expense: Since it is an expense account, a debit entry will increase the Salaries Expense balance.
Consider the impact on liabilities and cash: A debit to Salaries Expense does not directly decrease liabilities or increase cash; those accounts are affected by other transactions.
Conclude that a debit to Salaries Expense increases the expense, which aligns with the correct answer: 'Increase Salaries Expense'.
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