Deck 2: Debits and Credits: Analyzing and Recording Business Transactions

Question 1

The left side of any account is the:

A)debit side.
B)credit side.
C)ending balance.
D)beginning balance.

Answer 1

A

Question 2

The credit side is always the left side of the account.

Answer 2

False

Question 3

Which of the following types of accounts has a normal debit balance?

A)Withdrawals
B)Assets
C)Expenses
D)All of these answers are correct.

Answer 3

D

Question 4

The right side of any account is the:

A)debit side.
B)credit side.
C)ending balance.
D)beginning balance.

Question 5

An accounting device used to record increases and decreases in individual assets,liabilities,capital,revenue,expenses,and withdrawals is a(n):

A)chart of accounts.
B)account.
C)trial balance.
D)footing.

Question 6

The Accounts Payable account is:

A)a capital,and it has a normal debit balance.
B)an expense,and it has a normal credit balance.
C)a liability,and it has a normal debit balance.
D)a liability,and it has a normal credit balance.

Question 7

A formal account that has columns for date,explanation,posting reference,debit,and credit is called the:

A)T account.
B)standard account form.
C)ledger.
D)chart of accounts.

Question 8

A T account is used for demonstration purposes.

Question 9

A credit may signify a(n):

A)increase in assets.
B)decrease in liabilities.
C)increase in revenue.
D)increase in withdrawals.

Question 10

Explain the difference between expenses and withdrawals.

Question 11

Accounts Payable had a normal starting balance of $500.There were debit postings of $200 and credit postings of $100 during the month.The ending balance is:

A)$400 credit.
B)$800 debit.
C)$400 debit.
D)$800 credit.

Question 12

An account is said to have a debit balance if:

A)the footing of the debits exceeds the footing 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 last entry of the accounting period was posted on the debit side.

Question 13

A debit may signify a(n):

A)increase in asset accounts.
B)increase in liability accounts.
C)increase in the revenue account.
D)decrease in expense accounts.

Question 14

Which of the following types of accounts has a normal credit balance?

A)Withdrawals
B)Assets
C)Expenses
D)Revenues

Question 15

The side that increases the account balance,by the rules of debit and credit,is said to be the:

A)debit side.
B)credit side.
C)normal balance.
D)None of these answers is correct.

Question 16

The beginning balance in the Computers account was $3,000.The company purchased an additional $1000 worth of computers.The ending balance in the account is:

A)debit of $2,000.
B)credit of $3,000.
C)debit of $4,000.
D)credit of $2,000.

Question 17

A compound entry is:

A)a transaction involving more than one debit and/or credit.
B)used to prepare the trial balance.
C)included on the balance sheet.
D)found on the income statement.

Question 18

A ledger:

A)includes all company accounts and their balances.
B)can replace the financial statements.
C)is the same as a chart of accounts.
D)is known as a worksheet.

Question 19

The ledger is:

A)a group of accounts that records data from business transactions.
B)a tool used to insure that all accounts have normal balances.
C)a chronological record of the day's transactions.
D)a tool used to ensure that debits equal credits.

Question 20

An account that would be increased by a credit is:

A)Cash.
B)Prepaid Expense.
C)Utilities Expense.
D)Accounts Payable.

Question 21

The Salaries Payable account has total debit postings of $800 and credit postings of $1,500.The ending balance of the account is:

A)$2,300 debit.
B)$700 credit.
C)$2,300 credit.
D)$700 debit.

Question 22

Office Supplies had a normal starting balance of $75.There were debit postings of $80 and credit postings of $60 during the month.The ending balance of the account is:

A)$55 debit.
B)$55 credit.
C)$95 debit.
D)$95 credit.

Question 23

A credit to an asset account was posted as a credit to the Capital account.This error would cause:

A)assets to be overstated.
B)liabilities to be overstated.
C)capital to be understated.
D)Both A and C are correct.

Question 24

Carrie flew to San Francisco on a business trip that will be reimbursed by her employer.The purchase price of the ticket was $500 and it was bought on account.The entry to record the transaction is:

A)debit Accounts Payable,$500;credit Travel Expense,$500.
B)debit Capital,$500;credit Accounts Payable,$500.
C)debit Travel Expense,$500;credit Accounts Payable,$500.
D)debit Travel Expense,$500;credit Cash,$500.

Question 25

The beginning balance in Cash was $4,000.Additional cash of $2,000 was received.Checks were written totaling $2,500.The ending balance in cash is:

A)$2,000.
B)$6,000.
C)$4,500.
D)$3,500.

Question 26

Extreme Home bought painting equipment on account for $3,000.The entry would include:

A)debit to Supplies Expense,$3,000;credit to Cash,$3,000.
B)debit to Equipment,$3,000;credit to Cash,$3,000
C)debit to Equipment,$3,000;credit to Accounts Payable,$3,000.
D)debit to Supplies Expense,$3,000;credit to Accounts Payable,$3,000.

Question 27

What is a proper entry to show the owner making an investment in the company?

A)A credit to Cash and a debit to Capital
B)A debit to Cash and a credit to Capital
C)A debit to Cash and a credit to Revenue
D)A credit to Cash and a debit to Revenue

Question 28

Which of the statements of the rules of debit and credit is true?

A)Decrease Accounts Receivable with a credit and the normal balance is a credit.
B)Increase Accounts Payable with a credit and the normal balance is a credit.
C)Increase Revenue with a debit and the normal balance is a debit.
D)Decrease Cash with a debit and the normal balance is a debit.

Question 29

A credit to a liability account was posted as a credit to an expense account.This error would cause:

A)assets to be overstated.
B)liabilities to be overstated.
C)expenses to be overstated.
D)liabilities to be understated.

Question 30

The entry to record Tom's payment of a home telephone bill is:

A)debit Accounts Payable;credit Telephone Expense.
B)debit Tom,Withdrawals;credit Cash.
C)debit Telephone Expense;credit Cash.
D)debit Tom,Withdrawals;credit Accounts Payable.

Question 31

Dennis,owner of Dennis's Golf Center,withdrew $900 in cash from the business.Record the transaction by:

A)debiting Dennis,Withdrawals,$900;crediting Cash,$900.
B)debiting Accounts Receivable,$900;crediting Cash,$900.
C)debiting Expense,$900;crediting Cash,$900.
D)debiting Dennis,Withdrawals,$900;crediting Dennis,Capital,$900.

Question 32

The Accounts Receivable account has total debit postings of $2,000 and credit postings of $1,200.The balance of the account is:

A)$800 debit.
B)$800 credit.
C)$2,600 credit.
D)$2,600 debit.

Question 33

Which of the following entries records the investment of cash by John,owner of a sole proprietorship?

A)Debit John,Capital;credit Cash
B)Debit Cash;credit Revenue
C)Debit John,Withdrawals;credit Cash
D)Debit Cash;credit John,Capital

Question 34

Cash has a normal balance of $1,100.After collecting $800,the balance in the account is:

A)debit $300.
B)debit $1,900.
C)credit $300.
D)credit $1,900.

Question 35

Which of the following entries would be used to record the billing of fees earned?

A)Debit Accounts Receivable and credit Rental Fees
B)Credit Cash and credit Rental Fees
C)Debit Accounts Payable and credit Rental Fees
D)Debit Cash and debit Rental Fees

Question 36

Which of the following groups of accounts have a normal debit balance?

A)Revenue,liabilities,and capital
B)Assets,capital,and withdrawals
C)Liabilities,expenses,and assets
D)Assets,expenses,and withdrawals

Question 37

Which of the following accounts would be increased by a debit?

A)Cash
B)Accounts Payable
C)Capital
D)Service Revenue

Question 38

When recording transactions in two or more accounts and the totals of the debits and credits are equal,it is called:

A)debiting.
B)crediting.
C)balancing.
D)double-entry bookkeeping.

Question 39

A debit to an expense account was posted as a debit to a revenue account.This error would cause:

A)assets to be overstated.
B)liabilities to be overstated.
C)revenue to be understated.
D)None of the above is correct.

Question 40

The owner of BobCats R Us paid his personal MasterCard bill using a company check.The correct entry to record the transaction is:

A)credit Cash;debit Capital.
B)credit Cash;debit Supplies Expense.
C)credit Cash;debit Withdrawals.
D)credit Cash;debit Accounts Receivable.

Question 41

What would be the effect on the accounts if the business purchased office supplies for cash?

A)An asset would be debited and an expense debited.
B)Expense would be debited and Revenue credited.
C)An asset would be debited and Revenue credited.
D)An asset would be debited and an asset credited.

Question 42

The business bought supplies with cash.To record this:

A)an expense is debited and a liability is credited.
B)an asset is debited and an asset is credited.
C)an asset is debited and a liability is credited.
D)None of these is correct.

Question 43

A debit to an asset account was posted as a debit to an expense account.This error would cause:

A)liabilities to be overstated.
B)expenses to be overstated.
C)assets to be understated.
D)Both B and C are correct.

Question 44

One asset would be debited and another credited if:

A)the business provided services to a cash customer.
B)the business paid a creditor.
C)the business bought supplies paying cash.
D)the business provided services to a credit customer.

Question 45

The business incurred an expense and paid it immediately.To record this:

A)an expense is debited and a liability is credited.
B)an expense is debited and an asset is credited.
C)an asset is debited and asset is credited.
D)None of these is correct.

Question 46

A debit to a liability account was posted as a debit to a revenue account.This error would cause:

A)revenues to be understated.
B)liabilities to be understated.
C)revenue to be overstated.
D)None of the above is correct.

Question 47

The business provided services to a credit customer.To record this:

A)an asset is debited and a liability is credited.
B)an asset is debited and a revenue is credited.
C)an expense is debited and Capital is credited.
D)None of these is correct.

Question 48

What would be the effect on the accounts if the business provided services to a customer on account?

A)An asset would be debited and an expense credited.
B)Capital would be debited and Revenue credited.
C)An asset would be debited and Revenue credited.
D)An asset would be debited and Capital credited.

Question 49

A credit to an asset account was posted as a credit to a liability account.This error would cause:

A)assets to be understated.
B)liabilities to be overstated.
C)capital to be understated.
D)None of the above is correct.

Question 50

The owner invested personal equipment in the business.To record this transaction:

A)debit Equipment and credit Revenue.
B)debit Accounts Payable and credit Equipment.
C)debit Equipment and credit Capital.
D)credit Equipment and debit Capital.

Question 51

A liability would be credited and an expense debited if:

A)the business paid a creditor.
B)the business incurred an expense and did not pay the expense immediately.
C)the business bought supplies on account.
D)the business bought supplies for cash.

Question 52

What would be the effect on the accounts if the business received the telephone bill but did not pay it immediately?

A)An expense would be debited and a liability credited.
B)Capital would be debited and Revenue credited.
C)An expense would be debited and an asset credited.
D)An asset would be debited and Capital credited.

Question 53

The chart of accounts:

A)is a numbered list of all of the business's accounts.
B)allows accounts to be located quickly.
C)can be expanded as the business grows.
D)All of the above are correct.

Question 54

A debit to an asset account was posted as a debit to a liability account.This error would cause:

A)assets to be understated.
B)liabilities to be overstated.
C)capital to be understated.
D)None of the above is correct.

Question 55

Which of the following errors would cause the trial balance to be out of balance?

A)An entry is posted twice.
B)An entry is not posted at all.
C)A debit is entered as $500 and the credit is entered at $5,000.
D)None of these answers is correct.

Question 56

A debit to a liability account was posted as a debit to the Capital account.This error would cause:

A)assets to be overstated.
B)liabilities to be overstated.
C)capital to be overstated.
D)None of the above is correct.

Question 57

What would be the effect on the accounts if the business provided services to a customer collecting cash?

A)An asset would be debited and an expense debited.
B)Capital would be credited and Revenue credited.
C)An asset would be debited and Revenue credited.
D)An asset would be debited and Capital credited.

Question 58

A credit to an asset account was posted as a credit to a revenue account.This error would cause:

A)assets to be overstated.
B)revenue to be overstated.
C)expenses to be overstated.
D)Both A and B are correct.

Question 59

What would be the effect on the accounts if the owner withdrew cash?

A)An asset would be credited and an expense credited.
B)Withdrawals would be debited and an asset credited.
C)An asset would be debited and a revenue credited.
D)An expense would be debited and Capital credited.

Question 60

An asset would be debited and a liability credited if:

A)the business bought supplies for cash.
B)the business incurred an expense and paid it.
C)the business bought equipment on account.
D)None of these is correct.

Question 61

Accounts Payable indicates monies owed to us by our clients or customers.

Question 62

Equipment is an example of a capital account.

Question 63

The side of an account that increases the balance is always the same as the normal balance side.

Question 64

After deciding which accounts are affected,the next step in analyzing a transaction is to determine to which categories the accounts belong.

Question 65

A compound entry is when more than one transaction occurs.

Question 66

When the owner invests personal equipment in the business,cash is decreased.

Question 67

A chart of accounts:

A)is set up in alphabetical order.
B)is a list of customer accounts.
C)is a listing of all the accounts used by a company.
D)All of the above are correct.

Question 68

The debit side of all accounts decreases the balance and the credit side increases all accounts.

Question 69

Withdrawals increase on the credit side of the account.

Question 70

Two accounts are affected in every transaction.

Question 71

A transaction that involves more than one credit or more than one debit is called a compound entry.

Question 72

Double-entry accounting requires transactions to affect two or more accounts,and the total of the debits and credits must equal.

Question 73

An account that would be increased by a debit is:

A)Cash.
B)Fees Earned.
C)Capital.
D)Accounts Payable.

Question 74

Accounts Receivable indicates amounts owed to us by our clients or creditors.

Question 75

Which of the following groups of accounts have a normal credit balance?

A)Revenue,liabilities,and capital
B)Assets,capital,and withdrawals
C)Liabilities,expenses,and assets
D)Assets,expenses,and withdrawals

Question 76

In accrual basis accounting,revenues are only recorded when cash is received.

Question 77

Accounts receivable decrease on the debit side of the account.

Question 78

Cash is credited when the business makes a payment for supplies.

Question 79

Debits must always equal credits in a transaction or journal entry.

Question 80

The debit side is always the left side of the account.