Deck 2: Recording Business Transactions

Question 1

Which of the following accounts is a liability?

A)Accounts payable
B)Prepaid expenses
C)Service revenue
D)Salary expense

Answer 1

A

Question 2

Which of the following is NOT part of owners' equity?

A)Bills payable
B)Capital
C)Accounts receivable
D)Both A and C

Answer 2

D

Question 3

A trial balance is the list of all of a company's accounts along with their account numbers.

Answer 3

False

Question 4

Which of the following accounts is NOT an example of an asset?

A)Building
B)Cash
C)Bills payable
D)Accounts receivable

Question 5

Which of the following accounts is NOT an example of a liability?

A)Accounts receivable
B)Bills payable
C)Accounts payable
D)Wages payable

Question 6

A book holding all of the accounts is called the:

A)balance sheet.
B)ledger.
C)journal.
D)income statement.

Question 7

Which of the following accounts is an asset?

A)Expenses
B)Drawings
C)Bills payable
D)Cash

Question 8

A listing of all account titles in numerical order is a(n):

A)ledger.
B)journal.
C)chart of accounts.
D)income statement.

Question 9

An account is the detailed record of the changes in a particular asset,liability or owners' equity.

Question 10

In a typical chart of accounts,what information is provided along with the account name?

A)Dates of transactions
B)Account number
C)Account balance
D)Transaction amounts

Question 11

Accountants first record transactions in the:

A)trial balance.
B)journal.
C)ledger.
D)chart of accounts.

Question 12

Which of the following is the detailed record of the changes in a particular asset,liability or owners' equity?

A)Ledger
B)Journal
C)Trial balance
D)Account

Question 13

Which of the following accounts decreases with a debit?

A)Prepaid insurance
B)Bills payable
C)Land
D)Cash

Question 14

Which of the following accounts is an example of an owners' equity account?

A)Cash
B)Equipment
C)Drawings
D)Accounts payable

Question 15

Which of the following accounts is an example of a liability?

A)Bills payable
B)Service revenue
C)Accounts receivable
D)Building

Question 16

A trial balance is a list of all of the accounts with their balances.

Question 17

Which of the following accounts increases with a credit?

A)Accounts receivable
B)Cash
C)Capital
D)Prepaid expenses

Question 18

Which of the following accounts decreases with a credit?

A)Cash
B)Bills payable
C)Accounts payable
D)Capital

Question 19

In a typical chart of accounts,liabilities appear before assets.

Question 20

Which of the following accounts is an owners' equity account?

A)Accrued liability
B)Prepaid expense
C)Accounts payable
D)Capital

Question 21

The first step of journalising an entry is to:

A)identify the transaction from source documents.
B)post the accounts to the ledger.
C)determine whether each account is increased or decreased.
D)record the transaction in the journal,including a brief explanation.

Question 22

For Expenses,the category of account and its normal balance are:

A)Assets and a debit balance.
B)Owners' equity and a credit balance.
C)Liabilities and a credit balance.
D)Owners' equity and a debit balance.

Question 23

For Capital,the category of account and its normal balance are:

A)Assets and a debit balance.
B)Assets and a credit balance.
C)Liabilities and a credit balance.
D)Owners' equity and a credit balance.

Question 24

For Accounts payable,the category of account and its normal balance are:

A)Assets and a credit balance.
B)Liabilities and a credit balance.
C)Owners' equity and a credit balance.
D)Assets and a debit balance.

Question 25

For Salary payable,the category of account and its normal balance are:

A)Owners' equity and a credit balance.
B)Liabilities and a credit balance.
C)Assets and a credit balance.
D)Assets and a debit balance.

Question 26

Which of the following is the order of steps to journalise an entry?

A)Identify each account affected,record the transaction,determine increase or decrease in each account.
B)Record the transaction,identify each account affected,determine increase or decrease in each account.
C)Determine increase or decrease in each account,identify each account affected,record the transaction.
D)Identify each account affected,determine increase or decrease in each account,record the transaction.

Question 27

The accounting process of copying a transaction from the journal to the ledger is called:

A)proofing.
B)footing.
C)posting.
D)journalising.

Question 28

After initially recording a transaction,the data is then copied or posted to the:

A)journal.
B)chart of accounts.
C)trial balance.
D)ledger.

Question 29

For Revenues,the category of account and its normal balance are:

A)Assets and a debit balance.
B)Liabilities and a credit balance.
C)Owners' equity and a debit balance.
D)Owners' equity and a credit balance.

Question 30

For Supplies,the category of account and its normal balance are:

A)Owners' equity and a credit balance.
B)Assets and a credit balance.
C)Liabilities and a credit balance.
D)Assets and a debit balance.

Question 31

Debit refers to the right side of the T-account and credit refers to the left side.

Question 32

Which of the following is the last step of journalising an entry?

A)Determine whether each account has increased or decreased.
B)Identify each account affected and its type.
C)Record the transaction in the journal,including a brief explanation.
D)Post the accounts to the ledger.

Question 33

A liability account is increased by a debit.

Question 34

Which of the following accounts increases with a debit?

A)Cash
B)Accounts payable
C)Interest payable
D)Capital

Question 35

An asset account is increased by a debit.

Question 36

The drawings account is increased by a debit.

Question 37

A trial balance summarises a ledger by listing all the accounts with their ending balances.

Question 38

When a business collects cash,the Cash account is debited.

Question 39

For Drawings,the category of account and its normal balance are:

A)Owners' equity and a credit balance.
B)Liabilities and a credit balance.
C)Assets and a credit balance.
D)Owners' equity and a debit balance.

Question 40

Journalising a transaction means:

A)recording the transaction,including a brief explanation.
B)calculating the balance in an account.
C)copying the information from the journal to the ledger.
D)finding the account number in the chart of accounts.

Question 41

A business makes a payment of $1440 on a loan payable,consisting of a $110 interest payment and a $1330 principal payment.Which of the following journal entries would be recorded?

A)Loan payable is credited for $1330,Cash is credited for $110 and Interest expense is debited for $1440.
B)Cash is credited for $1440,Loan payable is debited for $1330 and Interest expense is debited for $110.
C)Loan payable is credited for $1440,Cash is debited for $1330 and Interest expense is debited for $110.
D)Cash is credited for $1330,Interest expense is credited for $110 and Loan payable is debited for $1440.

Question 42

A journal entry includes BOTH debit and credit amounts.

Question 43

A business purchased $200 of supplies on credit and recorded the following journal entry: $$\begin{array} { | l | r | r | } \hline \text { Supplies } & 200 & \\\hline \text { Accounts payable } & & 200 \\\hline\end{array}$$ Which of the following sets of ledger accounts reflects the posting of this transaction?

A)
$\begin{array}{c|c}{\text { Supplies }} \\\hline &200&\end{array}\quad\quad$$\begin{array}{r|}\text { Accounts payable } &\\\hline &200\end{array}$
B)
$\begin{array}{c}\text { Supplies } \\\hline 200 \mid\end{array}$ $\begin{array}{c}\text { Accounts payable } \\\hline \quad \mid 200\end{array}$
C)
$\begin{array}{c|c}{\text { Supplies }} \\\hline 200&\end{array}\quad\quad$$\begin{array}{r|}\text { Accounts payable } &\\\hline 200\end{array}$
D)
$\begin{array}{c|c}{\text { Supplies }} \\\hline & 200\end{array}\quad\quad$$\begin{array}{r|}\text { Accounts payable } &\\\hline 200\end{array}$

Question 44

Assets,Drawings and Expenses have a normal balance on the debit side.

Question 45

A business makes a cash payment of $12 000 to an account payable.Which account is credited?

A)Service revenue
B)Accounts receivable
C)Accounts payable
D)Cash

Question 46

An owner invests $20 000 in her new business by depositing the cash in the business bank account.Which account is credited?

A)Accounts receivable
B)Accounts payable
C)Cash
D)Capital

Question 47

A business renders services to a customer for $16 000 on credit.Which account is credited?

A)Accounts receivable
B)Cash
C)Service revenue
D)Accounts payable

Question 48

A business purchases equipment by paying $9023 in cash and issuing a loan payable of $16,446.Which of the following occurs?

A)Cash is debited for $9023,equipment is credited for $16,446 and loan payable is debited for $7423.
B)Cash is debited for $9023,equipment is debited for $16,446 and loan payable is credited for $25,469.
C)Cash is credited for $9023,equipment is debited for $25,469 and loan payable is credited for $16,446.
D)Cash is credited for $9023,equipment is credited for $25,469 and loan payable is debited for $16,446.

Question 49

When recording a transaction in a journal,the credit side is entered first,followed by the debit side.

Question 50

Beetles Ltd recorded the following journal entry on 2 March 2016: $$\begin{array} { | l | l | l | } \hline \text { Cash } & 6000 & \\\hline \text { Unearned revenue } & & 5000 \\\hline\end{array}$$ From the journal entry above,identify the transaction on 2 March 2016.

A)Beetles sold goods for $6000 cash.
B)Beetles received $6000 for services to be performed in a later period.
C)Beetles purchased goods worth $6000 and signed a one-year bill for the same.
D)Beetles paid $6000 for services to be received at a later date.

Question 51

A business makes a cash payment of $12 000 to an account payable.Which account is debited?

A)Accounts payable
B)Cash
C)Service revenue
D)Accounts receivable

Question 52

A business pays $500 cash for supplies.Which account is debited?

A)Service revenue
B)Cash
C)Accounts payable
D)Supplies

Question 53

An owner invests $20 000 in her new business by depositing the cash in the business bank account.Which account is debited?

A)Accounts payable
B)Cash
C)Accounts receivable
D)Capital

Question 54

For liabilities and revenues,a debit increases the account.

Question 55

The normal sequence of information flow in an accounting system is:

A)source document,ledger,journal.
B)journal,source document,ledger.
C)source document,journal,ledger.
D)ledger,journal,source document.

Question 56

Which of the following is NOT an example of a source document?

A)Bank deposit slip
B)Purchase invoice
C)Journal
D)Sales invoice

Question 57

An account that normally has a debit balance may occasionally have a credit balance.

Question 58

A business purchases equipment for cash in the amount of $8 000.Which account is debited?

A)Cash
B)Accounts payable
C)Equipment
D)Supplies expense

Question 59

A business renders services for $16 000 and collects cash from the customer.Which account is debited?

A)Service revenue
B)Cash
C)Accounts payable
D)Accounts receivable

Question 60

Which of the following statements about revenue is CORRECT?

A)Revenues increase owners' equity,so a revenue account's normal balance is a credit balance.
B)Revenues decrease owners' equity,so a revenue account's normal balance is a debit balance.
C)Revenues increase owners' equity,so a revenue account's normal balance is a debit balance.
D)Revenues decrease owners' equity,so a revenue account's normal balance is a credit balance.

Question 61

A business collects cash from a customer in payment of accounts receivable.Which account is credited?

A)Supplies
B)Cash
C)Accounts receivable
D)Service revenue

Question 62

A business buys $500 in supplies on credit.Which account is credited?

A)Service revenue
B)Cash
C)Supplies
D)Accounts payable

Question 63

A business pays cash back to the owner.Which account is credited?

A)Service revenue
B)Drawings
C)Accounts payable
D)Cash

Question 64

A business pays $500 cash for supplies.Which account is credited?

A)Service revenue
B)Accounts payable
C)Cash
D)Supplies

Question 65

A business collects cash from a customer in payment of accounts receivable.Which account is debited?

A)Cash
B)Service revenue
C)Accounts receivable
D)Supplies

Question 66

Which of the following journal entries would be recorded if Jane Brown started a business and then deposited cash of $6 000 into the business bank account?

A) $$\begin{array} { | l | r | r | } \hline \text { Tane Brown, capital } & 6000 & \\\hline \text { Cash } & & 6000 \\\hline\end{array}$$
B) $$\begin{array} { | l | r | r | } \hline \text { Tane Brown, capital } & 6000 & \\\hline \text { Accounts payable } & & 6000 \\\hline\end{array}$$
C) $$\begin{array} { | l | r | r | } \hline \text { Accounts payable } & 6000 & \\\hline \text { Cash } & & 6000 \\\hline\end{array}$$
D) $$\begin{array} { | l | r | r | } \hline \text { Cash } & 6000 & \\\hline \text { Jane Brown, capital } & & 6000 \\\hline\end{array}$$

Question 67

The following transactions for the month of March have been journalised and posted to the proper accounts.

Mar 1 Martinez invested $7000 cash in his new design services business.
Mar 2 Paid the first month's rent of $600.
Mar 3 Purchased equipment by paying $3000 cash and executing a loan payable for $3000.
Mar 4 Purchased office supplies for $550 cash.
Mar 5 Billed a client for $10,000 of design services completed.
Mar 6 Received $8000 on account for the services previously recorded.
What is the balance in Accounts receivable?

A)$2000
B)$10,000
C)$3000
D)$8000

Question 68

The following transactions for the month of March have been journalised and posted to the proper accounts.

Mar 1 Martinez invested $10,000 cash in his new design services business.
Mar 2 Paid the first month's rent of $500.
Mar 3 Purchased equipment by paying $1000 cash and executing a loan payable for $5000.
Mar 4 Purchased office supplies for $750 cash.
Mar 5 Billed a client for $11,000 of design services completed.
Mar 6 Received $7000 on account for the services previously recorded.
What is the ending balance in the Service revenue account?

A)$17,000
B)$10,000
C)$7000
D)$11,000

Question 69

A business pays cash back to the owner.Which account is debited?

A)Service revenue
B)Cash
C)Drawings
D)Accounts payable

Question 70

The following transactions for the month of March have been journalised and posted to the proper accounts.

Mar 1 Martinez invested $9000 cash in his new design services business.
Mar 2 Paid the first month's rent of $900.
Mar 3 Purchased equipment by paying $4000 cash and executing a loan payable for $9000.
Mar 4 Purchased office supplies for $750 cash.
Mar 5 Billed a client for $8000 of design services completed.
Mar 6 Received $7900 on account for the services previously recorded.
What is the balance in Cash?

A)$12,900
B)$11,250
C)$12,150
D)$15,250

Question 71

A business has the following transactions: The business is started by receiving $20 000 from the owner.The business purchases $500 in supplies on credit.The business purchases $2 000 in furniture on credit.The business renders services to various clients totalling $9 000 on credit.The business pays out $2 000 for Salary expense and $3 000 for Rent expense.The business pays $500 to a supplier for the supplies purchased earlier.The business collects $1 500 from one of its clients for services rendered earlier in the month.At the end of the month,all journal entries are posted to the ledger.The Cash account will appear as follows:

A)
$$\begin{array} { c | r r } { \text { Cash } } \\\hline& & \\& & 500 \\& & 2000 \\500 \\\hline& &\mathrm{Bal} \quad 2000\end{array}$$
B)
$$\begin{array} { r r | r } { \text { Cash } } \\\hline & 20000 & \\&2000 & \\&3000 & \\& 500 & \\& & 1500 \\\hline \text { Bal } \quad 24000 &\end{array}$$
C)
$$\begin{array} { r | r r } { \text { Cash } } \\\hline &&20,000\\2000 & & \\3000 & & \\500 & & \\& & 15000 \\\hline & \text { Bal } & 16000\end{array}$$
D)
$$\begin{array}{l}\text { Cash }\\\begin{array} { l r | r } \hline & 20000 \\&& 2000 \\& & 3000 \\& & 500 \\& 1500 & \\\hline \text { Bal } & 16000 &\end{array}\end{array}$$

Question 72

A business makes a cash payment for advertising expense.Which account is debited?

A)Accounts receivable
B)Cash
C)Advertising expense
D)Service revenue

Question 73

A business makes a cash payment to a supplier 'on credit' (for supplies that were purchased earlier).Which account is debited?

A)Service revenue
B)Accounts payable
C)Cash
D)Supplies

Question 74

The following transactions have been journalised and posted to the proper accounts.
1.Mark Call invested $7 000 cash in his new design services business.
2.The business paid the first month's rent with $700 cash.
3.The business purchased equipment by paying a $2 000 deposit and borrowing $4 500.
4.The business purchased supplies for $850 cash.
5.The business billed its clients a total of $4 000 for design services rendered.
6.The business collected $3 000 on credit from one of its clients.
What is the balance in Service revenue?

A)$3 000
B)$3 150
C)$1 000
D)$4 000

Question 75

Which of the following journal entries would be recorded if a business purchased equipment for $3 000 cash?

A) $$\begin{array} { | l | r | r | } \hline \text { Cash } & 3000 & \\\hline \text { Accounts payable } & & 3000 \\\hline\end{array}$$
B) $$\begin{array} { | l | r | r | } \hline \text { Cash } & 3000 & \\\hline \text { Equipment } & & 3000 \\\hline\end{array}$$
C) $$\begin{array} { | l | r | r | } \hline \text { Equipment } & 3000 & \\\hline \text { Accounts payable } & & 3000 \\\hline\end{array}$$
D) $$\begin{array} { | l | r | r | } \hline \text { Equipment } & 3000 & \\\hline \text { Cash } & & 3000 \\\hline\end{array}$$

Question 76

Which of the following journal entries would be recorded if a business renders services and receives cash of $400 from the customer?

A) $$\begin{array} { | l | r | r | } \hline \text { Service revenue } & 400 & \\\hline \text { Accounts payable } & & 400 \\\hline\end{array}$$
B) $$\begin{array} { | l | r | r | } \hline \text { Service revenue } & 400 & \\\hline \text { Accounts receivable } & & 400 \\\hline\end{array}$$
C) $$\begin{array} { | l | r | r | } \hline \text { Service revenue } & 400 & \\\hline \text { Cash } & & 400 \\\hline\end{array}$$
D) $$\begin{array} { | l | r | r | } \hline \text { Cash } & 400 & \\\hline \text { Service revenue } & & 400 \\\hline\end{array}$$

Question 77

When a business makes a cash payment,the Cash account is always debited.

Question 78

Which of the following journal entries would be recorded if a business purchased $200 in supplies on credit?

A) $$\begin{array} { | l | r | r | } \hline \text { Cash } & 200 & \\\hline \text { Supplies } & & 200 \\\hline\end{array}$$
B) $$\begin{array} { | l | r | r | } \hline \text { Supplies } & 200 & \\\hline \text { Cash } & & 200 \\\hline\end{array}$$
C) $$\begin{array} { | l | r | r | } \hline \text { Accounts payable } & 200 & \\\hline \text { Supplies } & & 200 \\\hline\end{array}$$
D) $$\begin{array} { | l | r | r | } \hline \text { Supplies } & 200 & \\\hline \text { Accounts payable } & & 200 \\\hline\end{array}$$

Question 79

When a business records an expense incurred,the expense account is always credited.

Question 80

A company received $75 000 from a customer 'on account'.The journal entry would be to:

A)debit Accounts receivable and credit Sales revenue.
B)debit Sales revenue and credit Accounts receivable.
C)debit Cash and credit Accounts receivable.
D)debit Accounts receivable and credit Cash.