Deck 2: The Recording Process

Question 1

The normal balance of all liability accounts is a debit.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

The use of different accounts is necessary to allow users to analyze the information.

Answer 3

True

Question 4

The double-entry system of accounting ensures that all the debits will equal all the credits in an entry.

Question 5

For transactions to be recorded correctly, debits must always be greater than credits.

Question 6

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 7

Transactions are entered in the trial balance and then transferred to journals.

Question 8

The normal balance for the cash account is a credit.

Question 9

An asset is increased by a debit.

Question 10

The accounting cycle is a series of steps followed by accountants in preparing financial statements.

Question 11

Source documents can provide evidence that a transaction has occurred.

Question 12

The normal balance of a revenue account is a credit.

Question 13

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

Question 14

A transaction must be analyzed to determine which accounts it will effect.

Question 15

The normal balance in an asset account is a debit.

Question 16

The first step in the recording process is to enter the transaction information in a journal.

Question 17

All business transactions must have a corresponding journal entry.

Question 18

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

Question 19

Each time a transaction is recorded; one side of the entry will be to cash.

Question 20

An account can have debit entries and credit entries.

Question 21

Posting must be completed before a trial balance can be done.

Question 22

Posting is the transfer of journal entries to the ledger accounts.

Question 23

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

Question 24

After a transaction has been posted, the trial balance will balance.

Question 25

Errors in a trial balance may only be caused by an error in posting the journal entries to the accounts.

Question 26

A chart of accounts should be arranged in alphabetical order for easier reference.

Question 27

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

Question 28

A transposition error involves the reversing of numbers in the posting process.

Question 29

If the trial balance balances, it proves that all of the entries have been made correctly.

Question 30

A ledger is the entire group of accounts maintained by a company.

Question 31

A trial balance that balances proves only that the debit accounts equal the credit accounts.

Question 32

Transactions are recorded in alphabetical order in a journal.

Question 33

If a journal entry is posted twice, then this error will be found when the trial balance is produced.

Question 34

Preparing the trial balance is the first step in the accounting cycle.

Question 35

For the trial balance to balance, the debits must equal the credits.

Question 36

A compound journal entry may require debits to several accounts and credits to several accounts.

Question 37

If an entry has been posted to the accounts twice, the trial balance will still balance.

Question 38

If the trial balance is out of balance and the difference between the debits and the credits is divisible evenly by nine then there is a transposition error.

Question 39

If a journal entry is NOT posted to an account, then the trial balance will NOT balance.

Question 40

The chart of accounts is list of all the accounts in a company.

Question 41

A debit to a liability account always indicates

A) a liability has been incurred.
B) an expense has been incurred.
C) the liability has been decreased.
D) a liability has been paid.

Question 42

A debit to an asset account always 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 43

The side of the account where increases are recorded

A) is always the left side.
B) is always the right side.
C) always creates a negative balance.
D) is the same side as the normal balance for that account.

Question 44

The right side of an account

A) is the date.
B) reflects all transactions for the accounting period.
C) is the debit side.
D) is the credit side.

Question 45

Which one of the following is equivalent to the expanded basic accounting equation?

A) Assets = Liabilities + Owner's Capital + Owner's Drawings - Revenues - 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 46

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 increase liabilities and increase assets.

Question 47

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 48

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

A) in at least two different accounts.
B) twice.
C) in a journal and in a ledger.
D) as an asset and as a liability.

Question 49

Which of the following statements about the tabular summary and account form of the cash account is correct?

A) All negative amounts in a tabular summary are cash payments and are recorded as debits under the account form.
B) All positive amounts in the tabular summary are cash receipts and are recorded as credits under the account form.
C) A positive cash balance in a tabular summary is reflected as a debit balance under the account form.
D) Companies are required to use both a tabular summary and the account form.

Question 50

To increase a liability account, the account is

A) debited.
B) credited.
C) posted.
D) journalized.

Question 51

An account is used as part of the recording process and is described by all except which one of the following?

A) An account can have either a debit or credit balance.
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 52

A debit is NOT the normal balance for

A) an expense account.
B) a supplies account.
C) an accounts payable account.
D) a drawings account.

Question 53

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 an asset 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 54

A trial balance may be done at any time during the accounting cycle.

Question 55

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

A) Capital account
B) Revenue account
C) Liability account
D) Drawings account

Question 56

Which of the following is NOT true about an asset?

A) Its normal balance is a debit.
B) To increase an asset a debit entry would be made.
C) To increase it, a credit entry should be made.
D) To decrease it, a credit entry should be made.

Question 57

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 58

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

A) credit side
B) trial balance
C) date
D) title

Question 59

The left side of an account is

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

Question 60

A T account

A) is a way of depicting the basic form of an account.
B) is listed in alphabetical order.
C) has the debit transactions equal to the credit transactions.
D) is used for accounts that have both a debit and credit balance.

Question 61

When an owner makes a withdrawal

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

Question 62

Which of the following statements is NOT true? The book of original entry

A) provides a chronological record of transactions.
B) helps prevent and locate errors.
C) is the same as the chart of accounts.
D) helps ensure debits equal credits.

Question 63

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 calculation of profit.

Question 64

A company pays $5,000 to its creditor. This would

A) increase both the company's assets and liabilities.
B) decrease both the company's assets and liabilities.
C) decrease the company's liquidity.
D) increase the company's owner's equity.

Question 65

If a company has received a payment from a customer, then

A) its cash account will be debited.
B) its cash account will be credited.
C) the cash account debits will exceed the cash account credits.
D) accounts receivable would be debited.

Question 66

An account balance is

A) not relevant in the accounting cycle.
B) the sum of all credit transactions within an account.
C) The net difference between the increases (including the beginning balance) and decreases recorded in the account.
D) the sum of all debit transactions within an account.

Question 67

Transactions are recorded for all of the following reasons except

A) when the transaction causes a change in the financial position of the company.
B) to make all of the accounts balance.
C) when evidence of the transaction is available.
D) when there is a specific effect on the accounting equation.

Question 68

A credit to the accounts receivable account

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

Question 69

A company receives a year's worth of rent in advance. Which of the following statements pertaining to this event is NOT correct?

A) The company's assets will decrease.
B) The company's assets will increase.
C) The company's total equity will remain unchanged.
D) The company's liabilities will increase.

Question 70

Of the following accounts, the one that normally has a debit balance is

A) Accounts Payable.
B) Interest Expense.
C) L. Darnell, Capital.
D) Consulting Revenue.

Question 71

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

A) Drawings
B) Revenues
C) Expenses
D) Liabilities

Question 72

Funds received before the delivery of goods and services would be shown as

A) unearned revenue on the statement of earnings.
B) unearned revenue on the balance sheet.
C) a credit to cash.
D) sales or service revenue on the statement of earnings.

Question 73

A debit to an expense account

A) decreases the owner's equity.
B) increases owner's equity.
C) directly affects the drawings account.
D) has no effect on the balance sheet.

Question 74

An accountant has debited an expense account for $1,000 and credited an asset account for $500. Which of the following would be a correct way to complete the recording of the transaction?

A) Debit an asset account for $500.
B) Credit a liability account for $500.
C) Debit an owner's equity account for $500.
D) Debit a liability account for $500.

Question 75

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 76

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 77

All of the following transactions should be recorded except for

A) providing services to customers.
B) purchasing supplies on account.
C) ordering equipment.
D) incurring expenses.
E) All of the above should be recorded.

Question 78

The 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 79

An accountant has debited an asset account for $1,000 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 $500.
C) Debit another asset account for $500.
D) Credit a different asset account for $500.

Question 80

The withdrawal of cash for personal use by the owners of a business requires a ___ to the drawings account and a ___ to the cash account.

A) debit; debit
B) debit; credit
C) credit; credit
D) credit; debit