Deck 3: Analyzing Business Transactions Using T Accounts

Question 1

Increases in assets and revenue are both recorded with debits.

Answer 1

False

Question 2

Increases in owner's equity are recorded with credits.

Answer 2

True

Question 3

Financial statements are prepared after the trial balance is prepared.

Answer 3

True

Question 4

Increases in the owner's drawing account are recorded with debits.

Question 5

An increase in an expense results in an increase in owner's equity.

Question 6

When developing a chart of accounts, the highest block of numbers is assigned to asset accounts.

Question 7

Revenue is a component of owner's equity.

Question 8

When preparing the trial balance, the total debits MUST equal the total credits.

Question 9

If the total on the debit side of a T account is greater than the total on the credit side, the balance is recorded on the debit side.

Question 10

The normal balance of a liability account is on the debit side.

Question 11

Debit entries increase asset, drawing, expense and liability accounts.

Question 12

A business transaction must affect at least two accounts.

Question 13

When an owner invests assets in a business, the capital account is debited.

Question 14

Increases in assets and expenses are both recorded with debits.

Question 15

Credits increase Liabilities, Owner's Equity, and Revenue.

Question 16

Utilities Expense would be debited when a company receives a bill for utilities that it will pay later.

Question 17

The current system of accounting is called the double-entry system because a debit to one account is balanced by a credit to another account.

Question 18

Another name for temporary accounts is real accounts.

Question 19

Another name for permanent accounts is real accounts.

Question 20

After transactions for the period have been recorded, a trial balance is prepared to verify the equality of total debits and total credits.

Question 21

Which of the following is not one of the formal financial statements that is made available to all users of the financial statements.

A)Income Statement
B)Trial Balance
C)Statement of Owner's Equity
D)Balance Sheet

Question 22

An account whose balance is transferred to the capital account at the end of an accounting period is a temporary account.

Question 23

A business receives a bill for utilities but decides to pay it next month. The business would record the receipt of the bill by:

A)Debiting Utilities Expense; Crediting Cash
B)Debiting Utilities Expense; Crediting Accounts Receivable
C)Debiting Utilities Expense; Crediting Accounts Payable
D)Debiting Accounts Payable; Crediting Utilities Expense

Question 24

A business earns $4,000 from various charge account clients. To record this transaction, the business would:

A)Debit Accounts Receivable; Credit Fees Income
B)Debit Cash; Credit Accounts Receivable
C)Debit Accounts Payable; Credit Fees Income
D)Debit Accounts Receivable; Credit Cash

Question 25

The classification and normal balance of the salaries expense account is:

A)a liability with a debit balance.
B)an expense with a credit balance.
C)an asset with a debit balance.
D)an expense with a debit balance.

Question 26

On a statement of owner's equity, beginning capital is $30,000, Net Income for the year is $11,000 and Drawing for the year is $6,000, the ending capital amount would be:

A)$25,000.
B)$47,000.
C)$35,000.
D)$30,000.

Question 27

A business purchases equipment costing $5,500. They pay $1,500 right away and charge the remaining amount. To record this transaction, the business would:

A)Debit Equipment $5,500; Credit Cash $1,500 and Credit Accounts Payable $4,000
B)Debit Equipment $5,500; Credit Accounts Payable $5,500
C)Debit Equipment $4,000; Credit Accounts Payable $4,000
D)Debit Equipment $1,500; Credit Cash $1,500

Question 28

Credits are used to record:

A)decreases in liabilities and increases in assets and owner's equity.
B)decreases in assets and owner's equity and increases in liabilities.
C)increases in liabilities and revenues.
D)increases in assets, liabilities, and owner's equity.

Question 29

On a statement of owner's equity, beginning capital is $152,000, Drawing for the year is $65,000, and the ending capital is $191,000. What is the amount of Net Income for the year?

A)$126,000
B)$ 87,000
C)$104,000
D)$ 26,000

Question 30

Which of the following represents the proper sequence for preparing the financial statements?

A)balance sheet, statement of owner's equity, income statement
B)income statement, balance sheet, statement of owner's equity
C)statement of owner's equity, income statement, balance sheet
D)income statement, statement of owner's equity, balance sheet

Question 31

A business performed $8,000 of services. Their customer paid $3,000 of the amount right away but
Charged the remaining amount. To record this transaction, the business would:

A)Debit Cash $3,000 and Debit Accounts Receivable $5,000 and Credit Fees Income $8,000
B)Debit Accounts Receivable $8,000 and; Credit Fees Income $8,000
C)Debit Cash $3,000; Credit Fees Income $3,000
D)Debit Cash $3,000 and Debit Accounts Payable $5,000; Credit Fees Income $8,000

Question 32

The classification and normal balance of the accounts receivable account is:

A)an asset with a debit balance.
B)a revenue with a debit balance.
C)a liability with a debit balance.
D)an asset with a credit balance.

Question 33

Which of the following entries records the withdrawal of cash for personal use by Ty Knott, the owner of a business?
A)debit Cash and credit Salary Expense

A)debit Ty Knott, Drawing, and credit Cash
B)debit Salary Expense and credit Cash
D)debit Cash and credit Ty Knott, Capital

Question 34

When recording transactions in the T-accounts, the debits should equal the credits:

A)Always.
B)Sometimes.
C)Never.
D)Only for asset accounts.

Question 35

Select the entry below to record the payment to employees for work performed during the pay period?

A)debit Cash, and credit Accounts Receivable
B)debit Salary Expense and credit Cash
C)debit Salary Expense and credit Accounts Receivable
D)debit Cash and credit Salary Expense

Question 36

An account with a balance that carries over from one accounting period to another is a nominal account.

Question 37

A business pays a creditor on account. The entry to record this transaction is:

A)Debit Cash; Credit Accounts Payable
B)Debit Accounts Receivable; Credit to Cash
C)Debit Accounts Receivable; Credit Accounts Payable
D)Debit Accounts Payable; Credit Cash

Question 38

A business purchases supplies on account. The entry to record this transaction is:

A)Debit to Supplies; Credit Accounts Receivable
B)Debit Supplies; Credit Accounts Payable
C)Debit Supplies; Credit to Cash
D)Debit to Cash; Credit Supplies

Question 39

Debits are used to record:

A)increases in assets.
B)increases in liabilities.
C)increases in revenue.
D)decreases in expenses.

Question 40

The ending capital balance appears on which of the following statement(s)?

A)Income Statement
B)Statement of owner's equity and balance sheet
C)Only on the Statement of owner's equity
D)Statement of owner's equity and income statement

Question 41

The total of the figures on the left side of a Cash account is $36,700. The total of the figures on the right side is $16,250. The balance of this account:

A)is $52,950 and would be recorded on the right side of the account.
B)is $20,450 and would be recorded on the left side of the account.
C)is $52,950 and would be recorded on the left side of the account.
D)is $20,450 and would be recorded on the right side of the account.

Question 42

The ABC Company paid cash on account for supplies purchased last month. This would be recorded in the T-accounts as a:

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

Question 43

The normal balance of an account is the:

A)the right side of the account.
B)decrease side of the account.
C)increase side of the account.
D)the left side of the account.

Question 44

The account used to record increases in owner's equity from the sale of goods or services is:

A)the capital account.
B)the cash account.
C)the fees income account.
D)the drawing account.

Question 45

If assets are numbered from 100-199, which of the following accounts would not be given a number in the 100 series?

A)Prepaid Rent
B)Supplies
C)Accounts Receivable
D)Accounts Payable

Question 46

Which of the following accounts have normal credit balances?

A)Accounts Payable and Equipment
B)Salaries Expense and Accounts Payable
C)Fees Income and John Smith, Capital
D)Accounts Receivable and Fees Income

Question 47

A firm paid cash to apply against a debt. To record this transaction, the accountant would:

A)credit Cash and credit Accounts Payable.
B)debit Accounts Payable and credit Cash.
C)debit Accounts Receivable and credit Cash.
D)debit Cash and credit Accounts Payable.

Question 48

If the trial balance totals are not equal, this may have been caused by a transposition error if the difference is divisible by:

A)9)
B)7)
C)3)
D)5)

Question 49

When the trial balance totals are not equal, the error may have been caused by recording a debit as a credit if the difference is divisible by:

A)9
B)5
C)3
D)2

Question 50

When revenue is earned from charge account sales, the accountant:

A)debits Cash and credits a revenue account.
B)debits Accounts Receivable and credits a revenue account.
C)debits a revenue account and credits the capital account.
D)debits a revenue account and credits Accounts Receivable.

Question 51

The ending capital balance appears on what financial statement(s)

A)income statement and the statement of owner's equity.
B)statement of owner's equity and the balance sheet.
C)income statement and balance sheet.
D)only on the balance sheet.

Question 52

Debits are used to record increases in:

A)assets and liabilities.
B)assets and expenses.
C)revenue and owner's equity.
D)assets and revenue.

Question 53

The Net Income amount from the Income Statement is transferred to which of the following statements?

A)the profit and loss statement
B)the statement of owner's equity
C)the trial balance
D)the balance sheet

Question 54

Which of the following types of accounts normally have debit balances?

A)liabilities and owner's equity
B)assets and revenue
C)assets, liabilities, and owner's equity
D)expenses and assets

Question 55

Which of the accounts below would ALL appear on the balance sheet.

A)Utility Expense, Salary Expense, Cash
B)Owner's Capital (beginning), Owner's Drawing, Supplies Expense
C)Accounts Receivable, Accounts Payable, Fee Income
D)Cash, Accounts Payable, Owner's Capital (ending balance)

Question 56

When charge customers pay cash to apply against their accounts, the amount is recorded:

A)on the left side of the Cash account and the right side of the Fees Income account.
B)on the left side of the Cash account and the right side of the Accounts Receivable account.
C)on the left side of the Accounts Payable account and the right side of the Cash account.
D)on the left side of the Cash account and the left side of the Accounts Receivable account.

Question 57

The "Net Income" or "Net Loss" is transferred from the income statement to the

A)chart of accounts.
B)trial balance.
C)balance sheet.
D)statement of owner's equity.

Question 58

If a trial balance is not in balance (the Debit and Credit columns are not equal), a logical first step is to

A)check each account balance in the general ledger to the trial balance number.
B)divide the difference by either 9 or 2.
C)check the addition of each column.
D)check each account balance calculation.

Question 59

Which of the following accounts is not a permanent account?

A)Cash
B)Thomas Bernard, Capital
C)Salaries Expense
D)Accounts Payable

Question 60

Which of the following transactions increase owner's equity?

A)owner withdrawals for personal use
B)receiving cash from customers on account
C)earning revenue
D)paying expenses

Question 61

The Net Income appears as a separate line item on what two statements?

A)the statement of owner's equity and the income statement
B)the trial balance and the income statement
C)the income statement and the balance sheet
D)the statement of owner's equity and the balance sheet

Question 62

A small pencil figure written at the base of an amount column showing the sum of the entries in the column is called a ________.

Question 63

Separate written records called____________ are kept for each asset and liability and for the owner's equity of a business.

Question 64

Which of the following accounts is NOT a nominal account?

A)Salaries Expense
B)Office Supplies
C)Moriah Paige, Drawing
D)Rent Revenue

Question 65

Which of the following does NOT describe a transposition?

A)It is an error.
B)It causes the difference between the debit total and the credit total to be divisible by 2.
C)It involves misplaced digits in a number.
D)It causes the trial balance to be out of balance.

Question 66

Revenue and expense accounts are called____________ accounts.

Question 67

The increase side of an account represents the____________ balance of the account.

Question 68

A decrease in a liability is recorded on the ________ side of the account.

Question 69

Which of the following would cause the Trial Balance to be out of balance?

A)Placing the Capital account balance in the Credit column
B)Placing the Rent Expense account balance in the Debit column
C)Placing the Accounts Receivable balance in the Credit column
D)Placing the Equipment account balance in the Debit column

Question 70

The difference between the debit and credit side of an account is called the account ________.

Question 71

An accounting system that involves recording the effects of each transaction as debits and credits is:

A)preparing financial statements.
B)the double-entry system.
C)completing one T account.
D)analyzing a business transaction.

Question 72

The error that occurs when the number $5.00 is written as $50.00 is called a(n)________ error.

Question 73

A statement prepared to test the equality of total debits and credits after transactions have been recorded is called a(n)________.

Question 74

Which of the following would cause the Debit column and the Credit column of the Trial Balance to be unequal?

A)Placing the Prepaid Rent balance in the Credit column
B)Placing the Rent Expense balance in the Debit column
C)Placing the Fees Income balance in the Credit column
D)Placing the Office Equipment balance in the Debit column

Question 75

Expense accounts are increased on the ________ side of the account.

Question 76

The right side of an account is referred to as the ________ side of an account.

Question 77

When equipment is purchased for cash, the cash account is credited and the ________ account is debited.

Question 78

A(n)____________ account is used to record increases in owner's equity from the sale of goods or services.

Question 79

A special type of owner's equity account set up to record withdrawals of assets by the owner for personal use is called a(n)____________ account.

Question 80

Which of the following would result in an error when preparing the Trial Balance?

A)Placing the Accounts Payable balance in the Credit column
B)Placing the Withdrawal account balance in the Debit column
C)Placing a Revenue account balance in the Credit column
D)Placing the balance in Prepaid Rent in the Credit column