Question

Question:For each of the following, (1) identify the type of account as an asset, liability, equity, revenue, or expense; (2) identify the normal balance of the account; and (3) enter debit(Dr.) or credit(Cr.) to identify the kind of entry that would increase the account balance.

a. Land e. Accounts Receivable i. Fees Earned

b. Cash f. Dividends j. Equipment

c. Legal Expense g. License Fee Revenue k. Notes Payable

d. Prepaid Insurance h. Unearned Revenue l. Common Stock

Short answer

Answer

All the asset and expense accounts would have a Debit balance and would use “Dr.” for increasing the balance. The liabilities and revenues would have a Credit balance and would use “Cr.” for increment.

Step-by-step solution

Type of accounts

S.No.	Accounts	Types
a.	Land	Asset
b.	Cash	Asset
c.	Legal Expense	Expense
d.	Prepaid Insurance	Asset
e.	Account Receivables	Asset
f.	Dividends	Equity
g.	License Fee Revenue	Revenue
h.	Unearned Revenue	Liability
i.	Fees Earned	Revenue
j.	Equipment	Asset
k.	Notes Payable	Liability
l.	Common Stock	Equity

Normal balances of the accounts

S.No.	Accounts	Normal Balance
a.	Land	Debit
b.	Cash	Debit
c.	Legal Expense	Debit
d.	Prepaid Insurance	Debit
e.	Account Receivables	Debit
f.	Dividends	Debit
g.	License Fee Revenue	Credit
h.	Unearned Revenue	Credit
i.	Fees Earned	Credit
j.	Equipment	Debit
k.	Notes Payable	Credit
l.	Common Stock	Credit

Entry type for increasing balance

S.No.	Accounts	Entry type for increment
a.	Land	Dr.
b.	Cash	Dr.
c.	Legal Expense	Dr.
d.	Prepaid Insurance	Dr.
e.	Account Receivables	Dr.
f.	Dividends	Dr.
g.	License Fee Revenue	Cr.
h.	Unearned Revenue	Cr.
i.	Fees Earned	Cr.
j.	Equipment	Dr.
k.	Notes Payable	Cr.
l.	Common Stock	Cr.