Deck 3: The Recording Process: Debits and Credits

Question 1

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

Answer 1

False

Question 2

Asset accounts are increased with credits.

Answer 2

False

Question 3

The normal balance of an asset account is a debit.

Answer 3

True

Question 4

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

Question 5

Revenues are part of owner's capital.

Question 6

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

Question 7

Liability accounts are increased with credits..

Question 8

The double-entry system of recording means that debits must equal credits.

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

The normal balance of all accounts is a debit.

Question 15

The normal balance of a liability account is a credit.

Question 16

The normal balance of an asset account is a credit.

Question 17

The normal balance of Owner's Capital is a debit.

Question 18

The normal balance of a liability account is a debit.

Question 19

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

Question 20

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

Question 21

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

Question 22

The investement of cash in the business by the owner increases total assets and total equity.

Question 23

The accounting equation could be written as assets - owner's capital = liabilities.

Question 24

Purchasing supplies for cash will require a credit to Supplies and a debit to Cash.

Question 25

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

Question 26

Purchasing supplies on account will increase Accounts Payable.

Question 27

A debit is recorded to increase an asset.

Question 28

The normal balance of any account is the decrease side.

Question 29

The purchase of supplies decreases Owner's Capital.

Question 30

The normal balance of an expense is a credit.

Question 31

Purchasing supplies for cash increases total assets.

Question 32

The investment of cash in the business by the owner is recorded with a debit to Owner's Capital.

Question 33

The investment of cash in the business by the owner increases total liabilities.

Question 34

Purchasing equipment for cash will increase total assets.

Question 35

The chart of accounts is the basic form of an account format.

Question 36

When cash is invested in the business by the owner, the Cash account is increased with a debit.

Question 37

The purchase of equipment is recorded with a debit to the Equipment account.

Question 38

Purchasing supplies on account increases total assets.

Question 39

Recording the purchase equipment for cash requires a debit to the Cash account.

Question 40

An investment of cash by the owner of a business will increase the owner's capital account.

Question 41

The accounting equation could be written as assets + expenses + owner's drawings = liabilities + revenues + owner's capital.

Question 42

The purchase equipment for cash increases total expenses.

Question 43

Receipt of a payment on account requires a credit to Accounts Payable.

Question 44

A payment on account requires a credit to Cash.

Question 45

Providing a service to a customer will be recorded by crediting the Service Revenue account.

Question 46

A payment on account requires a credit to Accounts Payable.

Question 47

Both services performed on account and services performed in exchange for Cash are recorded with a credit to Revenues.

Question 48

A debit represents an increase to an expense account.

Question 49

A credit is recorded to increase an expense.

Question 50

The purchase of supplies on account requires a credit to Accounts Payable.

Question 51

A service performed on account increases both assets and liabilities.

Question 52

The purchase of supplies on account requires a credit to Accounts Receivable.

Question 53

A credit represents a decrease to a revenue account.

Question 54

Services performed on account requires a credit to Accounts Receivable.

Question 55

Services performed on account requires a debit to Cash.

Question 56

A payment on account increases total expenses.

Question 57

When the owner withdraws cash for personal use, the Owner's Drawing account is credited.

Question 58

Services performed on account requires a debit to Accounts Receivable.

Question 59

A service performed on account increases both assets and equity.

Question 60

Receipt of a payment on account requires a credit to Accounts Receivable.

Question 61

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 62

A credit to an asset account indicates

A) an error.
B) that the normal balance of the account is a credit.
C) a decrease in the asset.
D) an increase in the asset.

Question 63

Which account listed below is increased with a debit?

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

Question 64

The right side of an account is

A) the credit side.
B) blank.
C) the debit side.
D) the normal balance of the account.

Question 65

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 66

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 67

A credit to a liability account indicates

A) that Cash decreased.
B) that the normal balance of the account is a credit.
C) a decrease in the liability.
D) an increase in the liability.

Question 68

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 69

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 70

An account consists of

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

Question 71

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

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

Question 72

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 73

The right side of an account is

A) the normal balace side.
B) the increase side.
C) the decrease side.
D) the credit side.

Question 74

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 75

A debit to a liability account indicates

A) that the normal balance of the account is a credit.
B) that the normal balance of the account is a debit.
C) an increase in the liability.
D) a decrease in the liability.

Question 76

Debits

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 77

The left side of an account is

A) the increase side.
B) the debit side.
C) the decrease side.
D) the normal balance side.

Question 78

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 used to record assets.
D) An account has a title.

Question 79

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 80

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.