Deck 3: Recording Accounting Transactions

Question 1

For liabilities, equity, and revenue accounts, debit entries represent ____________________.

Question 2

The ____________________ side of a liability account is used to record decreases in the account balance.

Question 3

Hesson Properties, Inc.
Transactions for Hesson Properties are provided below.


- Refer to the transactions that occurred at Hesson Properties. Based on these transactions, how much is still owed to Hesson from its customers at the end of November?

A) -0-
B) $250
C) $500
D) $700

Answer 3

$250

Question 4

Which of the following statements is true?

A) An entry in a general ledger account can be traced to the trial balance by referring to the page listed in the posting reference column of that ledger account.
B) The posting of an amount recorded in the general ledger can be verified by referring to the account number listed in the posting reference column on that line in the general journal.
C) Business transactions are recorded first in the general ledger, then that information is transferred to the general journal.
D) No explanation is needed for any entry in the general journal.

Question 5

Bravada Enterprises
Transactions for Bravada Enterprises are provided below.


-Refer to the transactions that occurred at Bravada Enterprises. The journal entry to record the September 23rd transaction will include a credit of $630 to:

A) Accounts receivable.
B) Cash.
C) Advertising expense.
D) Accounts payable.

Question 6

Several terms which represent components of an accounting system are listed below. For each term, write a brief explanation of how that component is used in the accounting cycle.

Question 7

For assets, expenses, and dividend accounts, credit entries represent ____________________.

Question 8

A(n) ____________________ is a list of all the accounts used that an entity uses to capture its business activities.

Question 9

Presented below are several accounts from the financial statements of Byron, Inc. for the year ended December 31, 2011:

Question 10

Listed below are selected accounts from the financial statements of Ellison Company for the year ended December 31. In the blank spaces provided for each account, indicate what type of account it is, its normal balance, and the debit/credit rules for increasing and decreasing it. Use the following abbreviations for your answer:

Question 11

Inferex Corporation
The following transactions were incurred by the Inferex Corporation during June 2012.


-
Refer to the information presented for Inferex Corporation. Record each transaction in proper journal entry format in the journal provided. A written explanation for each journal entry is not required.

Question 12

Inferex Corporation
The following transactions were incurred by the Inferex Corporation during June 2012.


-
Refer to the information presented for Inferex Corporation. Prepare a trial balance in proper format. Assume that Inferex had no additional accounts or balances other than those created from the June transactions.

Question 13

The list of accounts presented below are from the accounting records of Grammerle, Inc. on September 30, 2011. Assume that each account balance is normal, and present them in proper trial balance format.

Question 14

Inferex Corporation
The following transactions were incurred by the Inferex Corporation during June 2012.
Refer to the information presented for Inferex Corporation. Prepare a trial balance in proper format. Assume that Inferex had no additional accounts or balances other than those created from the June transactions.

Question 15

Four journal entries are presented below. Write an explanation for each entry.

Question 16

The accountant for Brumley Solutions, Inc. made the following errors while recording transactions for the period:

Question 17

Credits are always on the ____________________ side of a T-account.

Question 18

Inferex Corporation
The following transactions were incurred by the Inferex Corporation during June 2012.


-
Refer to the information presented for Inferex Corporation. Indicate the economic effects of each transaction above on the accounting equation. Use the following format for your answers. Show the dollar amounts in the appropriate columns and use a plus (+) sign to indicate an increase and a minus (-) sign to indicate a decrease.

Question 19

The list of accounts presented below are from the accounting records of Grammerle, Inc. on September 30, 2011. Assume that each account balance is normal, and present them in proper trial balance format.

Question 20

Geen's Alterations Shop began business as a corporation in 2011. Several transactions which occurred early in 2011 are described below. Record each transaction in proper journal form, excluding written explanations.

Question 21

The payment of employee salaries has what effect on the accounting equation?

A) Assets and stockholders' equity decrease
B) Liabilities and stockholders' equity decrease
C) Assets decrease and liabilities increase
D) Assets increase and liabilities decrease

Question 22

The payment of salaries to employees will debit salaries expense account and credit ____________________.

Question 23

Clay and Lora each invest $15,000 in Deyer, Inc. and are given shares of stock as evidence of their ownership interest. What effect does this transaction have on the accounting equation of Deyer?

A) Assets and liabilities increase
B) Assets and contributed capital increase
C) Liabilities increase and retained earnings decrease
D) Assets and liabilities decrease

Question 24

Which of the following is an internal event for a business entity?

A) An attorney provides services for clients.
B) An attorney purchases computer equipment.
C) An attorney recorded depreciation on his computer equipment.
D) An attorney receives cash payments from clients who were billed for legal services.

Question 25

A(n) ____________________ is a chronological record of all transactions entered into by a business.

Question 26

In which order are the accounts listed in the chart of accounts?

A) Assets, expenses, liabilities, stockholders' equity, revenues
B) Stockholders' equity, assets, liabilities, revenues, expenses
C) Assets, liabilities, stockholders' equity, revenues, expenses
D) Assets, liabilities, revenues, expenses, stockholders' equity

Question 27

The purchase of office equipment on credit has what effect on the accounting equation?

A) Assets and stockholders' equity decrease
B) Liabilities increase and stockholders' equity decreases
C) Assets and liabilities increase
D) Assets and liabilities decrease

Question 28

The ____________________ is the file or book that contains both the activity and balances of all company accounts.

Question 29

During March, Connor Corporation purchased supplies for cash. The supplies will be used in April. What effect does this transaction have on the accounting equation at the time the supplies are purchased?

A) Assets increase and stockholders' equity decreases
B) Assets and liabilities increase
C) There is no net effect on the accounting equation, as one asset account increases while another asset account decreases.
D) There is no net effect on the accounting equation, as the transaction should not be recognized until April.

Question 30

Which of the following is not an external event?

A) A grocery store recognizes losses from spoilage.
B) A grocery store runs ads in a local newspaper.
C) A grocery store purchases produce from a local farmer.
D) A grocery store sells groceries to customers on credit.

Question 31

Lang Industries provided services to customers then sent invoices for the amounts owed. What effect does this transaction have on the accounting equation?

A) Assets and liabilities increase
B) Assets and retained earnings increase
C) Liabilities decrease and contributed capital increases
D) Assets and liabilities decrease

Question 32

A chart of accounts is:

A) the same as a balance sheet.
B) usually a listing of accounts in alphabetical order.
C) usually a listing of accounts in financial statement order.
D) used in place of a ledger.

Question 33

What statement below best describes an Accounting Information System?

A) The system that identifies, records, summarizes, and communicates the various transactions of a company.
B) It is built to capture and report the effects of a company's accounting transactions.
C) Each system in an organization can vary widely, ranging from a manual system to a highly complex electronic system.
D) All of the Above

Question 34

Which of the following statements is true regarding economic events?

A) The signing of a service contract is an example of an external event that is recorded in the accounting records.
B) Every event which affects an entity can be identified from a source document.
C) All internal and external events must be measured with sufficient reliability.
D) External events involve exchanges between an entity and another entity outside the company.

Question 35

The normal balance of a revenue account is a ____________________.

Question 36

Bellarim Corporation made cash sales to customers. What effect does this transaction have on the accounting equation?

A) Liabilities and retained earnings increase
B) Assets and liabilities increase
C) Assets and retained earnings increase
D) There is no net effect on the accounting equation, as one asset account increases while another asset account decreases.

Question 37

Machinery is purchased on credit. What effect does this transaction have on the accounting equation?

A) Assets and liabilities increase
B) Assets and stockholders' equity increase
C) Liabilities increase and stockholders' equity decreases
D) Assets and liabilities decrease

Question 38

A(n) ____________________ is a list of each active account and its debit or credit balance at a specific point in time.

Question 39

A list of all asset, liability, equity, revenue, expense, and dividend accounts which are used by the company is called a:

A) general ledger.
B) general journal.
C) chart of accounts.
D) balance sheet.

Question 40

Which of the following is an internal event?

A) Caddie salaries are paid by a country club.
B) Dividends are distributed to a company's stockholders.
C) Potatoes used in a fast-food restaurant are purchased.
D) Products are transferred from the assembly area to the painting station.

Question 41

The telephone bill for the current period is received and recorded, but payment will be made later. What effect does this transaction have on the accounting equation?

A) Assets and liabilities increase
B) Assets and contributed capital increase
C) Liabilities increase and retained earnings decrease
D) Assets and liabilities decrease

Question 42

Which of the following transactions does not affect the total assets of Dusty Knoll Inc.?

A) The bills are received for last month's utilities
B) Dividends are paid to stockholders
C) Customers are billed for services provided on credit
D) A new automobile is purchased on credit

Question 43

When a firm borrows money, one effect on the accounting equation is a(n):

A) decrease in contributed capital
B) increase in assets
C) decrease in liabilities
D) decrease in assets

Question 44

Lang Industries received payments from customers who had been billed earlier for services provided. What effect does this transaction have on Lang's accounting equation?

A) Assets and liabilities increase.
B) Assets and stockholders' equity increase.
C) Assets and liabilities decrease.
D) There is no net effect on the accounting equation, as one asset account increases while another asset account decreases.

Question 45

The Regent Company purchased equipment for $100,000 cash. What is the effect on assets?

A) Increase
B) Decrease
C) No net effect
D) Cannot be determined from this limited information.

Question 46

Which of the following transactions affects the liabilities for Stallion Corporation?

A) Equipment is purchased for cash
B) Services are provided to a customer on credit
C) Payment is made on a bank loan
D) Common stock is issued

Question 47

Which of the following best describes one effect of recognizing expenses incurred by a business entity?

A) Assets will increase
B) Liabilities will decrease
C) Contributed capital will decrease
D) Retained earnings will decrease

Question 48

Which of the following accounts is decreased by a debit entry?

A) Unearned revenue
B) Prepaid insurance
C) Cash
D) Insurance expense

Question 49

The two-column record used to accumulate increases and decreases for individual assets, liabilities, equity, revenue, expense, and dividends items is a:

A) chart of accounts.
B) T-account.
C) trial balance.
D) posting.

Question 50

The feature of accounting in which means that there are at least two accounts affected in every transaction so that the accounting equation stays in balance is called:

A) the matching feature.
B) the classifying feature.
C) the dual nature of accounting.
D) the full disclosure principle.

Question 51

Debit entries are used to:

A) increase asset accounts.
B) increase revenue accounts.
C) increase liability accounts.
D) increase stockholders' equity.

Question 52

Which of the following statements regarding a company's operating activities is true?

A) Revenues decrease stockholders' equity
B) Expenses increase stockholders' equity
C) Expenses decrease stockholders' equity
D) Dividends decrease assets

Question 53

Payment is made for the telephone bill which was recorded previously. What effect does this transaction have on the accounting equation?

A) Assets and liabilities increase
B) Assets and retained earnings increase
C) Liabilities increase and contributed capital decreases
D) Assets and liabilities decrease

Question 54

Payment is made for machinery purchased previously on credit. What effect does this transaction have on the accounting equation?

A) Assets and liabilities increase
B) Assets and contributed capital increase
C) Liabilities decrease and retained earnings increase
D) Assets and liabilities decrease

Question 55

Credit entries are used to:

A) increase asset accounts.
B) increase liability accounts.
C) increase expense accounts.
D) increase dividends.

Question 56

Dividends are declared and paid to the company's stockholders. What effect does this transaction have on the company's accounting equation?

A) Assets and liabilities decrease
B) Assets and retained earnings decrease
C) Liabilities decrease and retained earnings increases
D) Liabilities increase and contributed capital decreases

Question 57

Services are provided to customers who paid immediately. What effect does this transaction have on the accounting equation?

A) Assets and liabilities increase
B) Assets and retained earnings increase
C) Liabilities increase and retained earnings decreases
D) Assets and liabilities decrease

Question 58

An entry made to the right side of an account is always a(n):

A) debit.
B) credit.
C) increase.
D) decrease.

Question 59

Which of the following statements best describes the effects of recognizing revenue earned by a business entity?

A) Assets increase only when cash sales are collected.
B) Stockholders' equity increases only when credit sales are made.
C) Assets and stockholders' equity increase when either cash or credit sales are made.
D) Assets increase and stockholders' equity decreases when either cash or credit sales are made.

Question 60

A credit means:

A) the event had a favorable impact on the entity's financial statements.
B) the event had an unfavorable impact on the entity's financial statements.
C) the event had an effect on the right side of the T-account.
D) the event had an effect on the liabilities.

Question 61

Which pair of accounts has the same set of rules for debit and credit entries?

A) Service revenue and Rent expense
B) Dividends and Retained earnings
C) Equipment and Salaries expense
D) Accounts receivable and Accounts payable

Question 62

The process of transferring amounts from the book of original entry into the ledger is referred to as:

A) journalizing.
B) posting.
C) analyzing.
D) classifying.

Question 63

The correct term for the entry made on the left side of a T-account is:

A) debit.
B) credit.
C) posting.
D) journalizing.

Question 64

An account is said to have a debit balance if:

A) the amount of the debits exceeds the amount of the credits.
B) there are more entries on the debit side than on the credit side.
C) its normal balance is debit without regard to the amounts or number of entries on the debit side.
D) the first entry of the accounting period was posted on the debit side.

Question 65

All of the following accounts have normal credit balances except:

A) Accounts payable.
B) Unearned revenue.
C) Common stock.
D) Inventory.

Question 66

Which of the following accounts is increased by a credit entry?

A) Accounts receivable
B) Dividends
C) Service revenue
D) Salaries expense

Question 67

Which of the following accounts is decreased by a debit entry?

A) Cash
B) Prepaid insurance
C) Accounts payable
D) Insurance expense

Question 68

The term for the process of recording accounting transactions in the general journal is:

A) analyzing.
B) journalizing.
C) posting.
D) classifying.

Question 69

What type of account is increased with a debit but is a decrease to retained earnings?

A) Liability
B) Asset
C) Revenue
D) Expense

Question 70

Listed below are selected accounts from the financial statements of Ellison Company for the year ended December 31. In the blank spaces provided for each account, indicate what type of account it is, its normal balance, and the debit/credit rules for increasing and decreasing it. Use the following abbreviations for your answer:

Question 71

The chronological record in which transactions are initially recorded in the order in which they occur is called a:

A) balance sheet.
B) chart of accounts.
C) trial balance.
D) general journal.

Question 72

All of the following accounts have normal debit balances except:

A) Accounts receivable
B) Dividends
C) Supplies expense
D) Service revenue

Question 73

Which pair of accounts has the same set of rules for debit and credit entries?

A) Common stock and Accounts payable
B) Salaries expense and Retained earnings
C) Cash and Notes payable
D) Sales revenue and Accounts receivable

Question 74

Four journal entries are presented below. Write an explanation for each entry.

Question 75

Presented below are several accounts from the financial statements of Byron, Inc. for the year ended December 31, 2011:
Each of Byron's accounts has been assigned an identification number which you will use as answers for the transactions described below. Enter the account numbers in the blank spaces under the headings Debit and Credit to indicate the accounts debited and credited when each transaction is recorded in a general journal.

Question 76

Inferex Corporation
The following transactions were incurred by the Inferex Corporation during June 2012.
Refer to the information presented for Inferex Corporation. Record each transaction in proper journal entry format in the journal provided. A written explanation for each journal entry is not required.

Question 77

Which of the following accounts is increased by a debit entry?

A) Common stock
B) Equipment
C) Notes payable
D) Service revenue

Question 78

When the amount for a debit entry in a general journal is transferred to a specific account in the general ledger, it must be posted as a:

A) debit to the account in the general ledger.
B) credit to the account in the general ledger.
C) total amount, without regard to debit or credit, since the general ledger accounts do not have spaces for debit and credit entries.
D) decrease to the account in the general ledger.

Question 79

A list of all active accounts and their balances at a particular date, which is used to prove the equality of debits and credits, is called a:

A) chart of accounts.
B) general ledger.
C) general journal.
D) trial balance.

Question 80

Several transactions are listed below, with the accounting equation stated to the right side of each. Use the following identification codes to indicate the effects of each transaction on the accounting equation: I = Increase; D = Decrease; NE = No net effect. Write your answers in the space provided under the accounting equation, being sure to include an identification code for each element of the accounting equation. An example is provided before the first transaction.