Deck 3: The Double-Entry Framework

Question 1

Equity accounts normally have debit balances.

Answer 1

False

Question 2

Prepaid insurance and supplies are assets because they will provide benefits for more than one month.

Answer 2

True

Question 3

Revenues decrease owner's equity.

Answer 3

False

Question 4

When services are performed for which payment will be received later,accounts receivable increases.

Question 5

Payment of rent on account decreases the Cash account.

Question 6

A T account has three parts: the title,the debit side,and the credit side.

Question 7

Withdrawals of cash and other assets by the owner for personal reasons decrease owner's equity.

Question 8

The trial balance is used in preparing financial statements.

Question 9

At least two accounts are affected by every transaction.

Question 10

When debits equal credits for a transaction,the accounting equation is in balance.

Question 11

The difference between the footings of an account is called the balance.

Question 12

The sum of the debits must equal the sum of the credits on the trial balance.

Question 13

To debit an account is to enter an amount on the left side of the account.

Question 14

Prepaid Insurance is an asset account.

Question 15

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called complex-entry accounting.

Question 16

A credit increases liabilities and owner's equity.

Question 17

Liability accounts normally have debit balances.

Question 18

Expense accounts normally have debit balances.

Question 19

If services for the month total $7,000 in cash and $1,500 on account,the revenue account increases $5,500.

Question 20

An increase or decrease in any asset,liability,owner's equity,revenue,or expense is always accompanied by an offsetting change within the basic accounting elements.

Question 21

John received $350 for delivery services; this transaction increased Cash and revenue.

Question 22

The owner's capital account normally has a credit balance.

Question 23

The balance of a T account is on the side with the larger footing.

Question 24

Owner's equity includes four types of accounts: Owner's Capital,Revenues,Expenses,and Owner's Drawing.

Question 25

If services for the month total $3,300 in cash and $700 on account,the cash account increases $700.

Question 26

Increases in owner's equity are entered as credits.

Question 27

A trial balance is a list of all accounts showing the title and balance of each account.

Question 28

The accounting equation must remain in balance.

Question 29

Kate made a $475 payment on her company van.She should credit Accounts Payable and debit the automobile account.

Question 30

If services for the month total $3,300 in cash and $700 on account,Accounts Receivable increases $700.

Question 31

Connie made a purchase on account of printer paper to last for about three months; this transaction increased Supplies and decreased Accounts Payable.

Question 32

Craig deposits $6,000 in an account to start a new business.He should debit Cash and credit his capital account.

Question 33

A trial balance is taken periodically to check the equality of the debits and credits.

Question 34

The purchase of a supply of markers for three months should be recorded as an increase in revenue and a decrease in cash.

Question 35

A trial balance is a formal business report.

Question 36

Mandy withdraws $600 from her business.This transaction increases cash but decreases owner's equity.

Question 37

Services on account increase a revenue account and increase the cash account.

Question 38

Elysa paid $135 for utilities for her office; this transaction increased Cash and the expense account.

Question 39

The standard T account includes all of the following EXCEPT

A) a credit side.
B) a debit side.
C) a title.
D) the current date.

Question 40

An account is a form or record used to keep track of the increases or decreases in the individual assets,liabilities,owner's equity,revenues,and expenses of a business entity.

Question 41

Examples of revenue accounts include all of the following EXCEPT

A) Wages.
B) Sales.
C) Delivery Fees.
D) Professional Fees.

Question 42

Liability,owner's capital,and revenue accounts normally have

A) debit balances.
B) large balances.
C) negative balances.
D) credit balances.

Question 43

The capital account

A) decreases with increased revenue.
B) increases with increased expenses.
C) has a normal balance of a debit.
D) increases when the owner invests money in the business.

Question 44

Accounts that affect owner's equity are

A) assets,capital,and revenue.
B) capital,liabilities,and expenses.
C) expenses,capital,and revenue.
D) drawing,assets,and liabilities.

Question 45

The drawing account should be used to show

A) the amount the owner has invested in the business.
B) the amount the owner has taken out of the business.
C) the amount the business has earned.
D) the amount the business has spent.

Question 46

The normal balance of a capital account

A) can be either a debit or a credit balance.
B) is a debit balance.
C) is a credit balance.
D) is called a footing.

Question 47

A T account has which of the following three major parts?

A) a title,a debit side,and a credit side
B) a title,a current date,and a balance
C) a debit side,a credit side,and a total column
D) a debit side,a credit side,and a balance

Question 48

An increase in an asset account may be offset by a(n)

A) decrease in a liability account.
B) increase in an expense account.
C) increase in owner's equity.
D) decrease in owner's equity.

Question 49

Increases are entered on the credit side of a(n)

A) asset account.
B) liability account.
C) expense account.
D) drawing account.

Question 50

The difference between the total debits and credits to an account is called a

A) balance.
B) ruling.
C) footing.
D) trial balance.

Question 51

A credit

A) increases assets.
B) is on the right side.
C) decreases liabilities.
D) decreases owner's equity.

Question 52

A cash payment on a loan affects which of the following accounts?

A) Cash and Accounts Receivable
B) Cash and Notes Payable
C) Cash and an expense account
D) Cash and a revenue account

Question 53

A debit

A) is on the left side.
B) decreases assets.
C) increases liabilities.
D) increases owner's equity.

Question 54

Totals on the debit and credit sides to determine the balance of an account are known as

A) rulings.
B) credits.
C) debits.
D) footings.

Question 55

An example of an expense is

A) prepaid insurance.
B) advertising.
C) accounts payable.
D) cash.

Question 56

An investment of cash in a business by the owner

A) increases cash.
B) decreases owner's equity.
C) appears in a liability account.
D) represents an obligation of the business.

Question 57

Revenues

A) decrease liabilities.
B) decrease cash.
C) increase expenses.
D) increase owner's equity.

Question 58

Asset and expense accounts normally have

A) credit balances.
B) large balances.
C) debit balances.
D) negative balances.

Question 59

A debit represents an increase in

A) an asset.
B) a liability.
C) owner's equity.
D) revenues.

Question 60

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called

A) single-entry accounting.
B) compound-entry accounting.
C) multiple-entry accounting.
D) double-entry accounting.

Question 61

Falana receives payment for services performed in the amount of $3,147.This transaction

A) decreases Wage Expense.
B) increases Cash.
C) increases owner's equity.
D) decreases Cash.

Question 63

A list of all accounts showing the account title and the balance of each account is called a(n)____________________.

Question 64

The balance sheet

A) is a list of all accounts showing the title and balance of each account.
B) is used as an aid in preparing the trial balance and income statement.
C) is for a period of time.
D) shows that assets equal liabilities plus owner's equity.

Question 65

Analyze the following transactions using the T account approach.Place the dollar amount on the debit and credit sides.After all transactions have been recorded,foot the accounts where necessary and enter the balance in the proper place.
​
​
​
​
​
​
​
​

Question 66

Payment of a telephone bill represents an increase in a(n)

A) asset.
B) liability.
C) revenue.
D) expense.

Question 67

Payment of office rent represents a decrease in

A) a liability account.
B) expenses.
C) cash.
D) a revenue account.

Question 68

Record the following transactions in the T accounts below.Indicate next to each entry the number for that transaction.After all transactions have been recorded,foot the accounts where necessary and enter the balances in the proper places.Prepare a trial balance for Douglas Distinctive Services as of December 31,20--.
​
​
​
​
​
​
​
​
​
​
​

Question 69

A debit to either the ____________________ account or a(n)____________________ account will cause a decrease in the owner's equity of a business.

Question 70

The trial balance

A) shows the current date.
B) shows only debit balances.
C) shows only credit balances.
D) lists only accounts that are used to prepare the balance sheet.

Question 71

A purchase of an asset on account

A) increases cash.
B) decreases owner's equity.
C) increases assets.
D) decreases expenses.

Question 72

Footings in T accounts

A) appear after each entry.
B) always appear on the right side.
C) are unnecessary when there is only one entry.
D) appear only in accounts carried over from the previous accounting period.

Question 73

The accounts below all have normal balances.Prepare a trial balance for Alana's Florist Shop as of September 30,20--.

Question 74

An amount entered on the left side of an account is called a(n)____________________.

Question 75

Analyze the following transactions using the T account approach.Place the dollar amounts on the debit and credit sides.Indicate next to each entry the number for that transaction.After all transactions have been recorded,foot the accounts where necessary and enter the balance in the proper place for each account.
1.Nick Bowman invested cash of $12,000 in the business.
2.Received and paid utility bill of $125.
3.Bought $300 of supplies on account.
4.Sold services worth $2,500 to customers on account.
5.Received cash payment of $800 from credit customers.

Question 76

Footings in T accounts

A) appear to the left of the amount columns.
B) are used for accounts with more than one debit or credit.
C) are only used in asset accounts.
D) are used for accounts with only one entry.

Question 77

The ____________________ is shown on the third line of the trial balance heading.

Question 78

Doug Allen has decided to go into the insect extermination business and to operate as Doug's Extermination Service.The following transactions were completed during the first month of operations,May,20--.
Enter the transactions in the T accounts,then enter the total of each column.If an account has entries on both sides,determine the balance and enter it on the side with the larger total.
​
​
​
​
​
​
​
​
​
​
​

Question 79

The purchase of an asset on account and making a partial payment results in all of the following EXCEPT

A) an increase in an asset account.
B) a decrease in the Cash account.
C) a balanced accounting equation.
D) an increase in owner's equity.

Question 80

The normal balance for an expense account would be on the ____________________ side.