Deck 2: Analyzing Transactions

Question 1

Prepaid expenses are an example of an expense.

Answer 1

False

Question 2

The T account got its name because it resembles the letter "T."

Answer 2

True

Question 3

The right hand side of a T account is known as a debit and the left hand side is known as a credit.

Answer 3

False

Question 4

Consuming goods and services in the process of generating revenues results in expenses.

Question 5

Accounts payable are accounts that you expect will be paid to you.

Question 6

A chart of accounts is a listing of accounts that make up the journal.

Question 7

The recording of cash payments from the cash account is done by entering the amount as a credit.

Question 8

The balance of the account can be determined by adding all of the debits, adding all of the credits, and adding the amounts together.

Question 9

An account in its simplest form has three parts to it: a title, an increase side, and a decrease side.

Question 10

Depending on the account title, the right side of the account is referred to as the credit side.

Question 11

Accounts in the ledger are usually maintained in alphabetical order.

Question 12

The chart of accounts should be the same for each business.

Question 13

Accounts are records of increases and decreases in individual financial statement items.

Question 14

The cash account will always be debited.

Question 15

A credit to the cash account will increase the account.

Question 16

The Unearned Revenues account is an example of a liability.

Question 17

The recording of cash receipts to the cash account will be done by debiting the account.

Question 18

The Dividends account is an expense.

Question 19

Debiting the cash account will increase the account.

Question 20

To determine the balance in an account, always subtract credits from debits.

Question 21

Dividends decrease stockholders' equity and are listed on the income statement as a deduction from revenue.

Question 22

The normal balance of a stockholders' equity account is a debit.

Question 23

A debit is abbreviated as Db. and a credit is abbreviated as Cr.

Question 24

When an owner invests assets in the business, the retained earnings account increases due to revenue being earned.

Question 25

Revenues are equal to the difference between cash receipts and cash payments.

Question 26

The normal balance of the dividends account is a debit.

Question 27

The normal balance of revenue accounts is a credit.

Question 28

For a month's transactions for a typical medium-sized business, the salary expense account is likely to have only credit entries.

Question 29

Expenses result from using up assets or consuming services in the process of generating revenues.

Question 30

Stockholders' equity will be reduced by the amount in the dividends account.

Question 31

When an account receivable is collected in cash, the total assets of the business increase.

Question 32

Revenue accounts are increased by credits.

Question 33

Liabilities are debts owed by the business entity.

Question 34

The normal balance of an expense account is a credit.

Question 35

When an account payable is paid with cash, the stockholders' equity in the business decreases.

Question 36

For a month's transactions for a typical medium-sized business, the accounts payable account is likely to have only credit entries.

Question 37

When a business receives a bill from the utility company, no entry should be made until the invoice is paid.

Question 38

The accounts payable account is listed in the chart of accounts as an asset.

Question 39

A dividends account represents the amount of earnings paid to the stockholders.

Question 40

Expense accounts are increased by credits.

Question 41

The increase side of an account is also the side of the normal balance.

Question 42

Journalizing transactions using the double-entry bookkeeping system will eliminate fraud.

Question 43

The post reference notation used in the ledger is the account number.

Question 44

The process of transferring the data from the journal to the ledger accounts is called posting.

Question 45

Debits will increase unearned revenues and revenues.

Question 46

The process of recording a transaction in the journal is called journalizing.

Question 47

Journal entries include both debit and credit accounts for each transaction.

Question 48

Normal account balances are on the increase side of the accounts.

Question 49

Transactions are listed in the journal chronologically.

Question 50

The double-entry accounting system records each transaction twice.

Question 51

The post reference notation used in the journal is the page number.

Question 52

Liabilities are increased with debits and decreased with credits.

Question 53

Liability accounts are increased by debits.

Question 54

A transaction that is recorded in the journal is called a journal entry.

Question 55

Journalizing is the process of entering amounts in the ledger.

Question 56

Transactions are initially entered into a record called a journal.

Question 57

All stockholders' equity accounts record increases to the accounts with credits.

Question 58

Journalizing always eliminates fraudulent activity.

Question 59

Assets are increased with debits and decreased with credits.

Question 60

Journal entries can have more than two accounts as long as the debits equal the credits.

Question 61

The erroneous arrangement of digits, such as writing $45 as $54, is called a slide.

Question 62

Posting a part of a transaction to the wrong account will cause the trial balance totals to be unequal.

Question 63

Postings made to standard account forms show a new balance after each entry.

Question 64

The process of transferring the debits and credits from the journal entries to the accounts is known as posting.

Question 65

The order of the flow of accounting data is 1) record in the ledger, 2) record in the journal, 3) prepare the financial statements.

Question 66

Accounts

A) do not reflect money amounts
B) are not used by entities that manufacture products
C) are records of increases and decreases in individual financial statement items
D) are only used by large entities with many transactions

Question 67

The totals at the bottom of the trial balance and the totals at the bottom of the balance sheet both show equality and balancing, and therefore should be equal.

Question 68

A group of related accounts that make up a complete unit is called a trial balance.

Question 69

A proof of the equality of debits and credits in the ledger at the end of an accounting period is called a balance sheet.

Question 70

A trial balance determines the accuracy of the numbers.

Question 71

Which of the following accounts is a stockholders' equity account?

A) Cash
B) Accounts Payable
C) Prepaid Insurance
D) Common Stock

Question 72

The erroneous moving of an entire number one or more spaces to the right or left, such as writing $85 as $850, is called a transposition.

Question 73

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 74

Accounts are classified in the ledger

A) chronologically
B) alphabetically
C) in accordance with their appearance in the financial statements
D) with the accounts used most often listed first

Question 75

A notation in the post reference column of the general journal indicates that the amount has been posted to the ledger.

Question 76

If the trial balance is in balance, it can be assumed that all journal entries were posted correctly and no errors were made.

Question 77

Even when a trial balance is in balance, there may be errors in the individual accounts.

Question 78

The debit side of an account

A) depends on whether the account is an asset, liability, or stockholders' equity
B) can be either side of the account depending on how the accountant set up the system
C) is the right side of the account
D) is the left side of the account

Question 79

The gross increases in stockholders' equity attributable to business activities are called

A) assets
B) liabilities
C) revenues
D) expenses

Question 80

Journalizing a transaction with both the debit and the credit for $69 instead of $96 will cause the trial balance to be out of balance.