Which of the following applications of the rules of debit and credit is true?

a. decrease Prepaid Insurance with a credit and the normal balance is a credit

b. increase Accounts Payable with a credit and the normal balance is a debit

c. decrease Cash with a debit and the normal balance is a credit

d. increase Equipment with a debit and the normal balance is a debit

d. increase Equipment with a debit and the normal balance is a debit

Explanation:

Equipment is an asset account. Asset accounts are increased with a debit, and decreased with a credit. Their normal balance is a debit because assets as a whole are debit accounts.

For example, if a firm has $1,000 worth of equipment, and purchases (with cash) $200 more, the journal entry would be:

Account Debit Credit

Equipment $200

Cash $200

And the new normal balance would be a debit worth of $1,200