Deck 2: The Recording Process

Question 1

An account is often referred to as a T-account because of the way it is constructed.

Answer 1

True

Question 2

Business documents can provide evidence that a transaction has occurred.

Answer 2

True

Question 3

A new account is opened for each transaction entered into by a business firm.

Answer 3

False

Question 4

The drawing account is a subdivision of the owner's capital account and appears as an expense on the income statement.

Question 5

The recording process becomes more efficient and informative if all transactions are recorded in one account.

Question 6

When the volume of transactions is large recording them in tabular form is more efficient than using journals and ledgers.

Question 7

The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

Question 8

The normal balance of all accounts is a debit.

Question 9

Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts.

Question 10

Transactions are entered in the ledger accounts and then transferred to journals.

Question 11

A debit to an account indicates an increase in that account.

Question 12

Revenues are a subdivision of owner's capital.

Question 13

A credit balance in a liability account indicates that an error in recording has occurred.

Question 14

All business transactions must be entered first in the general ledger.

Question 15

Debit and credit can be interpreted to mean increase and decrease respectively.

Question 16

A compound journal entry requires several debits to one account and several credits to one account.

Question 17

Each transaction must be analyzed in terms of its effect on the accounts before it can be recorded in a journal.

Question 18

A simple journal entry requires only one debit to an account and one credit to an account.

Question 19

Under the double-entry system revenues must always equal expenses.

Question 20

If a revenue account is credited the revenue account is increased.

Question 21

After a transaction has been posted the reference column in the journal should not be blank.

Question 22

The trial balance will not balance when incorrect account titles are used in journalizing or posting.

Question 23

Which one of the following is not a part of an account?

A) Credit side
B) Trial balance
C) Debit side
D) Title

Question 24

The left side of an account is

A) blank.
B) a description of the account.
C) the debit side.
D) the balance of the account.

Question 25

The normal balance of an expense is a credit.

Question 26

The journal provides a chronological record of transactions.

Question 27

The chart of accounts is a special ledger used in accounting systems.

Question 28

The chart of accounts is a listing of the accounts and the account numbers which identify their location in the ledger.

Question 29

The number and types of accounts used by different business enterprises are the same if generally accepted accounting principles are being followed by the enterprises.

Question 30

The double-entry system is a logical method for recording transactions and results in equal amounts for debits and credits for each transaction.

Question 31

A journal is also known as a book of original entry.

Question 32

The ledger is merely a bookkeeping device and therefore does not provide much useful data for management.

Question 33

The primary purpose of a trial balance is to prove the mathematical equality of the debits and credits after posting.

Question 34

Transactions are recorded in alphabetic order in a journal.

Question 35

The complete effect of a transaction on the accounts is disclosed in the journal.

Question 36

A trial balance does not prove that all transactions have been recorded or that the ledger is correct.

Question 37

The account titles used in journalizing transactions need not be identical to the account titles in the ledger.

Question 38

An account consists of

A) one part.
B) two parts.
C) three parts.
D) four parts.

Question 39

A general ledger should be arranged in the order in which accounts are presented in the financial statements beginning with the balance sheet accounts.

Question 40

Posting is the process of proving the equality of debits and credits in the trial balance.

Question 41

The double-entry system requires that each transaction must be recorded

A) in at least two different accounts.
B) in two sets of books.
C) in a journal and in a ledger.
D) first as a revenue and then as an expense.

Question 42

Which one of the following could represent the expanded basic accounting equation?

A) Assets = Liabilities + Owner's Capital + Owner's Drawings - Revenue - Expenses.
B) Assets + Owner's Drawings + Expenses = Liabilities + Owner's Capital + Revenues.
C) Assets - Liabilities - Owner's Drawings = Owner's Capital + Revenues - Expenses.
D) Assets = Revenues + Expenses - Liabilities.

Question 43

Debits

A) decrease both assets and liabilities.
B) decrease liabilities and increase assets.
C) increase both assets and liabilities.
D) increase liabilities and decrease assets.

Question 44

An account is a part of the financial information system and is described by all except which one of the following?

A) An account has a debit and credit side.
B) An account is a source document.
C) An account may be part of a manual or a computerized accounting system.
D) An account has a title.

Question 45

Which of the following correctly identifies normal balances of accounts? A)
$\begin{array}{ll}\text { Assets } & \text { Debit } \\\text { Liabilities } & \text { Credit } \\\text { Owner's Capital } & \text { Credit } \\\text { Revenues } & \text { Debit } \\\text { Expenses } & \text { Credit }\end{array}$


B)
$\begin{array}{ll}\text { Assets } & \text { Debit } \\\text { Liabilities } & \text { Credit } \\\text { Owner's Capital } & \text { Credit } \\\text { Revenues } & \text { Credit } \\\text { Expenses } & \text { Credit }\end{array}$

C)
$\begin{array}{ll}\text { Assets } & \text { Credit } \\\text { Liabilities } & \text { Debit } \\\text { Owner's Capital } & \text { Debit } \\\text { Revenues } & \text { Credit } \\\text { Expenses } & \text { Debit }\end{array}$

D)
$\begin{array}{ll}\text { Assets } & \text { Debit } \\\text { Liabilities } & \text { Credit } \\\text { Owner's Capital } & \text { Credit } \\\text { Revenues } & \text { Credit } \\\text { Expenses } & \text { Debit }\end{array}$

Question 46

For the basic accounting equation to stay in balance each transaction recorded must

A) affect two or less accounts.
B) affect two or more accounts.
C) always affect exactly two accounts.
D) affect the same number of asset and liability accounts.

Question 47

In recording an accounting transaction in a double-entry system

A) the number of debit accounts must equal the number of credit accounts.
B) there must always be entries made on both sides of the accounting equation.
C) the amount of the debits must equal the amount of the credits.
D) there must only be two accounts affected by any transaction.

Question 48

Which of the following is not true of the terms debit and credit?

A) They can be abbreviated as Dr. and Cr.
B) They can be interpreted to mean increase and decrease.
C) They can be used to describe the balance of an account.
D) They can be interpreted to mean left and right.

Question 49

An account consists of

A) a title a debit balance and a credit balance.
B) a title a left side and a debit balance.
C) a title a debit side and a credit side.
D) a title a right side and a debit balance.

Question 50

An accountant has debited an asset account for $1400 and credited a liability account for $500. What can be done to complete the recording of the transaction?

A) Nothing further must be done.
B) Debit an owner's equity account for $900.
C) Debit another asset account for $900.
D) Credit a different asset account for $900.

Question 51

Credits

A) decrease both assets and liabilities.
B) decrease assets and increase liabilities.
C) increase both assets and liabilities.
D) increase assets and decrease liabilities.

Question 52

An account will have a credit balance if the

A) credits exceed the debits.
B) first transaction entered was a credit.
C) debits exceed the credits.
D) last transaction entered was a credit.

Question 53

The best interpretation of the word credit is the

A) offset side of an account.
B) increase side of an account.
C) right side of an account.
D) decrease side of an account.

Question 54

An accountant has debited an asset account for $1300 and credited a liability account for $600. Which of the following would be an incorrect way to complete the recording of the transaction?

A) Credit an asset account for $700.
B) Credit another liability account for $700.
C) Credit an owner's equity account for $700.
D) Debit an owner's equity account for $700.

Question 55

A T-account is

A) a way of depicting the basic form of an account.
B) what the computer uses to organize bytes of information.
C) a special account used instead of a trial balance.
D) used for accounts that have both a debit and credit balance.

Question 56

A debit is not the normal balance for which account listed below?

A) Owner's Drawings
B) Cash
C) Accounts Receivable
D) Service Revenue

Question 57

A credit is not the normal balance for which account listed below?

A) Capital account
B) Revenue account
C) Liability account
D) Owner's Drawings account

Question 58

The right side of an account

A) is the correct side.
B) reflects all transactions for the accounting period.
C) shows all the balances of the accounts in the system.
D) is the credit side.

Question 59

The normal balance of any account is the

A) left side.
B) right side.
C) side which increases that account.
D) side which decreases that account.

Question 60

A debit to an asset account indicates

A) an error.
B) a credit was made to a liability account.
C) a decrease in the asset.
D) an increase in the asset.

Question 61

Boise Co. pays its employees twice a month on the 7^th and the 21^st. On June 21 Boise Co. paid employee salaries of $6000. This transaction would

A) increase owner's equity by $6000.
B) decrease the balance in Salaries and Wages Expense by $6000.
C) decrease net income for the month by $6000.
D) be recorded by a $6000 debit to Salaries and Wages Payable and a $6000 credit to Salaries and Wages Expense.

Question 62

When an owner makes a withdrawal

A) it doesn't have to be cash it could be another asset.
B) the owner's drawings account will be increased with a credit.
C) the owner's capital account will be directly increased with a debit.
D) the owner's drawings account will be decreased with a debit.

Question 63

Which account below is not a subdivision of owner's equity?

A) Owner's Drawings
B) Revenues
C) Expenses
D) Liabilities

Question 64

An awareness of the normal balances of accounts would help you spot which of the following as an error in recording?

A) A debit balance in the owner's drawings account
B) A credit balance in an expense account
C) A credit balance in a liabilities account
D) A credit balance in a revenue account

Question 65

Qwik Company showed the following balances at the end of its first year: $$\begin{array} { l r } \text { Cash } & \$ 8,700 \\\text { Prepaid insurance } & 9,400 \\\text { Accounts receivable } & 7,000 \\\text { Accounts payable } & 5,800 \\\text { Notes payable } & 9,400 \\\text { Owner's Capital } & 2,300 \\\text { Owner's Drawings } & 1,400 \\\text { Revenues } & 44,000 \\\text { Expenses } & 35,000\end{array}$$ What did Qwik Company show as total credits on its trial balance?

A) $52400
B) $61500
C) $62900
D) $70900

Question 66

On January 14 Maxine Industries purchased supplies of $900 on account. The entry to record the purchase will include

A) a debit to Supplies and a credit to Accounts Payable.
B) a debit to Supplies Expense and a credit to Accounts Receivable.
C) a debit to Supplies and a credit to Cash.
D) a debit to Accounts Receivable and a credit to Supplies.

Question 67

In the first month of operations for Pendleton Industries the total of the debit entries to the cash account amounted to $33000 ($13000 investment by the owner and revenues of $20000). The total of the credit entries to the cash account amounted to $21000 (purchase of equipment $8000 and payment of expenses $13000). At the end of the month the cash account has a(n)

A) $5000 credit balance.
B) $5000 debit balance.
C) $12000 debit balance.
D) $12000 credit balance.

Question 68

At January 1 2016 Croc Industries reported owner's capital of $140000. During 2016 Croc had a net loss of $30000 and owner drawings of $15000. At December 31 2016 the amount of owner's capital is

A) $ 95000.
B) $110000.
C) $125000.
D) $155000.

Question 69

During February 2016 its first month of operations the owner of Solcist Co. invested cash of $50000. Solcist had cash revenues of $16000 and paid expenses of $21000. Assuming no other transactions impacted the cash account what is the balance in Cash at February 29?

A) $5000 credit
B) $5000 debit
C) $45000 debit
D) $55000 debit

Question 70

Bertoli Company showed the following balances at the end of its first year: $\begin{array}{lr}\text { Cash } & \$ 4,000 \\\text { Prepaid insurance } & 7,000 \\\text { Accounts receivable } & 8,000 \\\text { Accounts payable } & 4,000 \\\text { Notes payable } & 7,000\\\text { Owner's Capital } & 3,000 \\\text { Owner's Drawings } & 2,000 \\\text { Revenues } & 32,000 \\\text { Expenses } & 25,000\end{array}$ What did Bertoli Company show as total credits on its trial balance?

A) $14000
B) $46000
C) $44000
D) $48000

Question 71

A credit to a liability account

A) indicates an increase in the amount owed to creditors.
B) indicates a decrease in the amount owed to creditors.
C) is an error.
D) must be accompanied by a debit to an asset account.

Question 72

Which of the following statements is not true?

A) Expenses increase owner's equity.
B) Expenses have normal debit balances.
C) Expenses decrease owner's equity.
D) Expenses are a negative factor in the computation of net income.

Question 73

The owner's drawings account

A) appears on the income statement along with the expenses of the business.
B) must show transactions every accounting period.
C) is increased with debits and decreased with credits.
D) is not a proper subdivision of owner's equity.

Question 74

In the first month of operations the total of the debit entries to the cash account amounted to $1400 and the total of the credit entries to the cash account amounted to $800. The cash account has a(n)

A) $800 credit balance.
B) $1400 debit balance.
C) $600 debit balance.
D) $600 credit balance.

Question 75

Madrid Industries purchased supplies for $1200. They paid $500 in cash and agreed to pay the balance in 30 days. The journal entry to record this transaction would include a debit to an asset account for $1200 a credit to a liability account for $700. Which of the following would be the correct way to complete the recording of the transaction?

A) Credit an asset account for $500.
B) Credit another liability account for $500.
C) Credit the Capital account for $500.
D) Debit the Capital account for $500.

Question 76

On June 1 2016 Barcelona Inc. reported a cash balance of $11000. During June Barcelona made deposits of $3000 and made disbursements totalling $9000. What is the cash balance at the end of June?

A) $5000 debit balance
B) $14000 debit balance
C) $5000 credit balance
D) $4000 credit balance

Question 77

Phast Mail Service purchased equipment for $2000. Phast paid $500 in cash and signed a note for the balance. Phast debited the Equipment account credited Cash and

A) nothing further must be done.
B) debited the Capital account for $1500.
C) credited another asset account for $500.
D) credited a liability account for $1500.

Question 78

Which of the following statements is true?

A) Debits increase assets and increase liabilities.
B) Credits decrease assets and decrease liabilities.
C) Credits decrease assets and increase liabilities.
D) Debits decrease liabilities and decrease assets.

Question 79

If a company has overdrawn its bank balance then

A) its cash account will show a debit balance.
B) its cash account will show a credit balance.
C) the cash account debits will exceed the cash account credits.
D) it cannot be detected by observing the balance of the cash account.

Question 80

Assets normally show

A) credit balances.
B) debit balances.
C) debit and credit balances.
D) debit or credit balances.