The following excerpt is from a conversation between Kate

Purvis
The following excerpt is from a conversation between Kate Purvis, the president and chief
operating officer of Light House Company, and her neighbor, Dot Evers.Dot: Kate, I'm taking a
course in night school, "Intro to Accounting." I was wondering-could you answer a couple of
questions for me?Kate: Well, I will if I can.Dot: Okay, our instructor says that it's critical we
understand the basic concepts of accounting, or we'll never get beyond the first test. My
problem is with those rules of debit and credit . . . you know, assets increase with debits,
decrease with credits, etc.Kate: Yes, pretty basic stuff. You just have to memorize the rules. It
shouldn't be too difficult.Dot: Sure, I can memorize the rules, but my problem is I want to be
sure I understand the basic concepts behind the rules. For example, why can't assets be
increased with credits and decreased with debits like revenue? As long as everyone did it that
way, why not? It would seem easier if we had the same rules for all increases and decreases in
accounts. Also, why is the left side of an account called the debit side? Why couldn't it be called
something simple . . . like the "LE" for Left Entry? The right side could be called just "RE" for
Right Entry.Finally, why are there just two sides to an entry? Why can't there be three or four
sides to an entry?In a group of four or five, select one person to play the role of Kate and one
person to play the role of Dot.1. After listening to the conversation between Kate and Dot, help
Kate answer Dot's questions.2. What information (other than just debit and credit journal
entries) could the accounting system gather that might be useful to Kate in managing Light
House Company?View Solution:
The following excerpt is from a conversation between Kate Purvis
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