For the following transaction, answer the questions that follow in accordance with the rules ofjournalizingand thedouble-entry accounting system:

Transaction:

Reed Company paid $1,000cashfor a one-year insurance policy in advance.

Which two accounts are affected?Choose one

Accounts Payable

Accounts Receivable

Accumulated Depreciation, Buildings

Accumulated Depreciation, Equipment

Advertising Expense

Buildings

Capital

Cash

Depreciation Expense, Buildings

Depreciation Expense, Equipment

Drawing

Equipment

Insurance Expense

Interest Payable

Interest Expense

Land

Prepaid Advertising

Prepaid Insurance

Prepaid Rent

Rent Expense

Rent Revenue

Salaries Expense

Salaries Payable

Service Revenue

Supplies

Supplies Expense

Deferred Rent Revenue

Utilities Expense

Utilities Payable

Deferred Revenue

Wages Expense

Wages Payable

Choose one

Accounts Payable

Accounts Receivable

Accumulated Depreciation, Buildings

Accumulated Depreciation, Equipment

Advertising Expense

Buildings

Capital

Cash

Depreciation Expense, Buildings

Depreciation Expense, Equipment

Drawing

Equipment

Insurance Expense

Interest Payable

Interest Expense

Land

Prepaid Advertising

Prepaid Insurance

Prepaid Rent

Rent Expense

Rent Revenue

Salaries Expense

Salaries Payable

Service Revenue

Supplies

Supplies Expense

Deferred Rent Revenue

Utilities Expense

Utilities Payable

Deferred Revenue

Wages Expense

Wages Payable

What kind of accounts are they?Choose one

Asset

Liability

Owner's Equity (Capital)

Owner's Equity (Drawing)

Owner's Equity (Revenue)

Owner's Equity (Expense)

Choose one

Asset

Liability

Owner's Equity (Capital)

Owner's Equity (Drawing)

Owner's Equity (Revenue)

Owner's Equity (Expense)

Do the account balances increase or decrease?

Increase

Decrease

Increase

Decrease

Do wedebitorcreditthe accounts?

Debit

Credit

Debit

Credit