Deck 2: Recording Business Transactions

Question 1

Liabilities are economic resources that are expected to benefit the business in the future.

Answer 1

False

Question 2

Which of the following is an asset account?

A)Wages Payable
B)Notes Payable
C)Unearned Revenue
D)Accounts Receivable

Answer 2

D

Question 3

An accounts receivable requires the business to pay cash in future.

Answer 3

False

Question 4

A payable involves a future receipt of cash.

Question 5

Nuptial Inc.paid the rent for the current month in cash.Which of the following account titles will be debited?

A)Prepaid rent
B)Rent payable
C)Rent revenue
D)Rent expense

Question 6

A payment of an expense in advance is called a prepaid expense.

Question 7

A liability created when a business collects cash from customers in advance of providing services or delivering goods is called a(n)________.

A)notes receivable
B)unearned revenues
C)equity
D)revenues

Question 8

Unearned revenue is a liability account.

Question 9

A customer's promise to pay in the future for services or goods sold is called a(n)________.

A)Accounts Receivable
B)Accounts Payable
C)Unearned Revenue
D)Notes Payable

Question 10

Amounts earned from delivering goods or services to customers are called ________.

A)notes receivable
B)unearned revenues
C)equity
D)revenues

Question 11

Which of the following is a collection of all the accounts,the changes in those accounts,and their balances?

A)a source document
B)a journal
C)a ledger
D)a trial balance

Question 12

Which of the following is a liability account?

A)Accounts Payable
B)Prepaid Expense
C)Salaries Expense
D)Service Revenue

Question 13

Which of the following is a liability account?

A)Service Revenue
B)Building
C)Accounts Receivable
D)Unearned Revenue

Question 14

Which of the following is an asset account?

A)Salaries Expense
B)Accounts Payable
C)Service Revenue
D)Prepaid Expense

Question 15

________ represents a debt owed for renting a building currently.

A)Prepaid rent
B)Rent payable
C)Rent revenue
D)Rent expense

Question 16

The account title used for recording the payment of rent in advance for an office building is ________.

A)prepaid rent
B)rent payable
C)rent revenue
D)rent expense

Question 17

Which of the following is a liability account?

A)Accounts Receivable
B)Cash
C)Building
D)Notes Payable

Question 18

A chart of accounts is a detailed record of the changes in a particular asset,liability,or stockholders' equity.

Question 19

A chart of accounts is a list of all of a company's accounts with their account numbers.

Question 20

Which of the following details is provided in a typical chart of accounts?

A)account balance
B)account number
C)dates of transactions
D)transaction amounts

Question 21

The system of accounting in which every transaction affects at least two accounts is called the double-entry system.

Question 22

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

Question 23

Which type of an account is Common Stock?

A)equity
B)asset
C)liability
D)revenue

Question 24

Which of the following accounts increases with a credit?

A)Cash
B)Common Stock
C)Accounts Receivable
D)Prepaid Expenses

Question 25

A debit always means a decrease and a credit means increase.

Question 26

A listing of all account titles in numerical order is called a(n)________.

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

Question 27

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

Question 28

Which of the following is an asset account?

A)Cash
B)Notes Payable
C)Dividends
D)Expenses

Question 29

The balances in the accounts of liabilities and revenues are increased with a credit.

Question 30

The Dividends account is increased by a debit.

Question 31

The normal balance of an account is the increase side of the account.

Question 32

All asset accounts and equity accounts increase with a debit.

Question 33

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

Question 34

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

Question 35

An asset account is increased by a debit.

Question 36

The Common Stock account is increased by a debit.

Question 37

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

Question 38

Which of the following accounts decreases with a credit?

A)Cash
B)Common Stock
C)Accounts Payable
D)Notes Payable

Question 39

When a business records revenue earned,the Revenue account is credited.

Question 40

A liability account is increased by a debit.

Question 41

Dividends is a(n)________ account that has a normal ________ balance.

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

Question 42

Which of the following statements is true of expenses?

A)Expenses increase stockholders' equity,so an expense account's normal balance is a credit balance.
B)Expenses decrease stockholders' equity,so an expense account's normal balance is a credit balance.
C)Expenses increase stockholders' equity,so an expense account's normal balance is a debit balance.
D)Expenses decrease stockholders' equity,so an expense account's normal balance is a debit balance.

Question 43

Which of the following statements is true of revenue?

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

Question 44

Source documents provide the evidence and data for accounting transactions.

Question 45

Which of the following statements is true of the Common Stock account?

A)It is an equity account that has a normal credit balance.
B)It is a liability account that has a normal credit balance.
C)It is a liability account that has a normal debit balance.
D)It is an equity account that has a normal debit balance.

Question 46

For Revenues,the category of account and its normal balance is ________.

A)stockholders' equity and a credit balance
B)assets and a debit balance
C)assets and a credit balance
D)stockholders' equity and a debit balance

Question 47

The Accounts Receivable account of Nuptials Inc.is shown below. $$\begin{array} { | r | r | } \hline { \text { Accounts Receivable } } \\\hline 26,000 & 3,500 \\5,000 & \\& \\\hline & \\\hline\end{array}$$ Calculate the ending balance of the account.

A)$33,500,debit
B)$31,000,debit
C)$3,500,credit
D)$27,500,debit

Question 48

Which of the following groups of accounts normally have a debit balance?

A)assets and expenses
B)revenues and expenses
C)liabilities and stockholders' equity
D)assets and liabilities

Question 49

Which of the following groups of accounts will decrease with a debit?

A)assets and expenses
B)revenues and expenses
C)liabilities and stockholders' equity
D)assets and liabilities

Question 50

For Stockholders' Equity,the category of accounting equation and its normal balance is ________.

A)equity and a credit balance
B)assets and a debit balance
C)equity and a debit balance
D)assets and a credit balance

Question 51

The Accounts Payable account is a(n)________ account and carries a ________ normal balance.

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

Question 52

Which of the following accounts decreases with a debit?

A)Accounts Receivable
B)Notes Payable
C)Cash
D)Land

Question 53

The Salaries Payable account is a(n)________.

A)liability account with a normal debit balance
B)asset account with a normal debit balance
C)liability account with a normal credit balance
D)asset account with a normal credit balance

Question 54

A shortened form of an account in the ledger is called a ________.

A)trial balance
B)balance sheet
C)chart of accounts
D)T-account

Question 55

Which of the following groups of accounts normally have a credit balance?

A)assets and liabilities
B)equity and assets
C)liabilities and stockholders' equity
D)assets and expenses

Question 56

For Expenses,the category of account and its normal balance is ________.

A)stockholders' equity and a credit balance
B)assets and a debit balance
C)assets and a credit balance
D)stockholders' equity and a debit balance

Question 57

The Accounts Receivable account is a(n)________ account and carries a ________ normal balance.

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

Question 58

For Office Supplies,the category of account and its normal balance is ________.

A)liabilities and a debit balance
B)assets and a debit balance
C)liabilities and a credit balance
D)assets and a credit balance

Question 59

Which of the following accounts increases with a debit?

A)Cash
B)Interest Payable
C)Accounts Payable
D)Common Stock

Question 60

For the Cash account,the category of account and its normal balance is ________.

A)assets and a debit balance
B)liabilities and a credit balance
C)liabilities and a debit balance
D)assets and a credit balance

Question 61

Which of the following is a source document that provides the evidence and data for accounting transactions?

A)journal
B)sales invoice
C)ledger
D)trial balance

Question 62

The first step in the journalizing and posting process is to ________.

A)post the accounts to the ledger
B)identify each account involved and its type
C)determine whether each account has increased or decreased
D)record the transaction in the journal,including a brief explanation

Question 63

Stewart Candle Company received cash of $40,000 by issuing 4,000 common shares at $10 each.Which of the following accounts will be debited?

A)Accounts Receivable
B)Cash
C)Common Stock
D)Accounts Payable

Question 64

A business makes a cash payment of $12,000 to a supplier,for supplies purchased two weeks earlier.Which of the following accounts will be debited?

A)Cash
B)Accounts Payable
C)Bank
D)Accounts Receivable

Question 65

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

A)identify each account affected → determine increase or decrease in each account → record the transaction
B)identify each account affected → record the transaction → determine increase or decrease in each account
C)record the transaction → identify each account affected → determine increase or decrease in each account
D)determine increase or decrease in each account → identify each account affected → record the transaction

Question 66

After initially recording a transaction,the data is then transferred to the ________.

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

Question 67

A business purchases equipment for $8,000 cash.Which of the following accounts will be credited?

A)Cash
B)Accounts Payable
C)Common Stock
D)Equipment

Question 68

A journal entry under the double-entry system includes both debit and credit amounts.

Question 69

A business purchased $3,500 of office supplies for cash.Which of the following sets of ledger accounts reflects the posting of this transaction?

A)

B)

C)

D)

Question 70

Which of the following is the final step in the journalizing and posting process?

A)posting the accounts to the ledger
B)identifying each account affected and its type
C)determining whether the accounting equation is in balance
D)determining whether each account has increased or decreased

Question 71

Whitney Chemicals Company received cash of $40,000 by issuing 4,000 common shares at $10 each.Which of the following accounts will be credited?

A)Accounts Receivable
B)Cash
C)Common Stock
D)Accounts Payable

Question 72

A business renders services to a client and issues a sales invoice.The amount will be collected from the customer at a later time.Which of the following would be true at the time the invoice is issued?

A)stockholders' equity will decrease
B)total liabilities will increase
C)total assets will decrease
D)net income will increase

Question 73

Posting a transaction means ________.

A)calculating the balance in an account
B)transferring data from the journal to the ledger
C)preparing a summary of account balances
D)finding the account number in the chart of accounts

Question 74

Accountants first record transactions in a ________.

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

Question 75

Journalizing a transaction involves ________.

A)calculating the balance in an account using journal entries
B)posting the account balances in the chart of accounts
C)preparing a summary of account balances
D)recording the data only in the journal

Question 76

Which of the following sequences is the normal sequence of flow of accounting data?

A)ledger → journal → source document
B)journal → source document → ledger
C)source document → journal → ledger
D)source document → ledger → journal

Question 77

A business purchases equipment for $8,000 cash.Which of the following accounts will be debited?

A)Cash
B)Accounts Payable
C)Common Stock
D)Equipment

Question 78

The accounting process of transferring a transaction from the journal to the ledger is called ________.

A)journalizing
B)posting
C)compounding
D)sourcing

Question 79

The process of transferring data from the ledger to the journal is called posting.

Question 80

Debits in the journal are always posted as debits in the ledger.