Exercises Analyze statements about accounting and the recording process. E2.1 (LO 1), K Faith Dillon has prepared the following list of statements about accounts. 1. An account is an accounting record of either a specific asset or a specific liability. 2. An account shows only increases, not decreases, in the item it relates to. 3. Some items, such as cash and accounts receivable, are combined into one account. 4. An account has a left, or credit side, and a right, or debit side. 5. A simple form of an account consisting of just the account title, the left side, and the right side is called a T-account. Instructions Identify each statement as true or false. If false, indicate how to correct the statement. Identify debits, credits, and normal balances. 11 20 E2.2 (LO 1), Selected transactions for L. Takemoto, an interior decorating firm, in its first month of business, are as follows. Stockholders invested $15,000 cash Jan. 2 exchange for common stock. 3 Purchased used car for $8,200 cash 9 Purchased supplies on account for $. Billed customers $1,800 for services 16 Paid $200 cash for advertising. Received $780 cash from customers 23 Paid creditor $300 cash on balance 28 Declared and paid a $500 cash divid Instructions For each transaction indicate the following. a. The basic type of account debited and credited (asset, liability, stockholders' equity). b. The specific account debited and credited (Cash, Rent Expense, Service Revenue, etc.). c. Whether the specific account is increased or decreased. d. The normal balance of the specific account. Use the following format, in which the January 2 transaction is given as an example. Account Debited (a) (b) (c) Basic Specific Date Type Account Effect Jan. Asset Cash Increase 2 Journalize transactions