Deck 2: Analyzing Transactions

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

A credit to the cash account will increase the account.

Question 6

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

Question 7

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

Question 8

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

Question 9

The cash account will always be debited.

Question 10

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

Question 11

Debiting the cash account will increase the account.

Question 12

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

Question 13

Prepaid expenses are an example of an expense.

Question 14

The unearned revenue account is an example of a liability.

Question 15

The drawing account is an expense.

Question 16

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

Question 17

Accounts in the ledger are usually maintained in alphabetical order.

Question 18

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

Question 19

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

Question 20

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

Question 21

Revenue accounts are increased by credits.

Question 22

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

Question 23

The normal balance of revenue accounts is a credit.

Question 24

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

Question 25

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

Question 26

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

Question 27

The normal balance of an expense account is a credit.

Question 28

The normal balance of a capital account is a debit.

Question 29

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

Question 30

Owner's equity will be reduced by the amount in the drawing account.

Question 31

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

Question 32

Expense accounts are increased by credits.

Question 33

Withdrawals decrease owner's equity and are listed on the income statement as a deduction from revenue.

Question 34

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

Question 35

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

Question 36

Liabilities are debts owed by the business entity.

Question 37

A drawing account represents the amount of withdrawals made by the owner.

Question 38

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

Question 39

The normal balance of the drawing account is a debit.

Question 40

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

Question 41

All owner's equity accounts record increases to the accounts with credits.

Question 42

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

Question 43

Journalizing is the process of entering amounts in the ledger.

Question 44

Journalizing always eliminates fraudulent activity.

Question 45

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

Question 46

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

Question 47

Liability accounts are increased by debits.

Question 48

Transactions are initially entered into a record called a journal.

Question 49

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

Question 50

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

Question 51

Assets are increased with debits and decreased with credits.

Question 52

Transactions are listed in the journal chronologically.

Question 53

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

Question 54

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

Question 55

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

Question 56

Debits will increase unearned revenues and revenues.

Question 57

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

Question 58

The double-entry accounting system records each transaction twice.

Question 59

Liabilities are increased with debits and decreased with credits.

Question 60

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

Question 61

Which of the following accounts is an owner's equity account?

A) Cash
B) Accounts Payable
C) Prepaid Insurance
D) Ross Morris, Capital

Question 62

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 63

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 64

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

Question 65

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

Question 66

A trial balance determines the accuracy of the numbers.

Question 67

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

Question 68

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 69

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.

Question 70

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 71

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

Question 72

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

Question 73

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

Question 74

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

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

Question 75

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 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

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 78

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

Question 79

The debit side of an account

A) depends on whether the account is an asset, liability, or owner's 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 80

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