Deck 2: Recording Business Transactions

Question 1

Owner's withdrawals and expenses increase equity.

Answer 1

False

Question 2

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

Answer 2

False

Question 3

Provide an explanation for each of the following asset accounts.

Answer 3

Question 4

Which of the following is an asset account?

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

Question 5

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 6

The owner's claim to the assets of a business is called equity or owner's equity.

Question 7

Which of the following is an asset account?

A)Cash
B)Notes Payable
C)Dividends
D)Unearned Revenue

Question 8

Which of the following is a liability account?

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

Question 9

Which of the following is an asset account?

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

Question 10

A payable involves a future receipt of cash.

Question 11

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 12

Unearned revenue is a liability account.

Question 13

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

Question 14

________ represents a debt owed for renting a building currently.

A)Prepaid Rent
B)Rent Payable
C)Rent Revenue
D)Rent Expense

Question 15

Which is a true statement regarding the accounting equation?

A)The equation can be stated as assets minus liabilities equals equity.
B)The equation consists of three parts: assets,liabilities,and net income.
C)The equation is an optional tool for accountants to use.
D)The equation does not need to balance during a specific period.

Question 16

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

Question 17

Which of the following is a liability account?

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

Question 18

Which of the following is a liability account?

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

Question 19

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 revenue
C)accrued liability
D)service revenue

Question 20

Provide an explanation for each of the follow liability accounts.

Question 21

"All debits are increases and all credits are decreases." Is this a correct statement? Explain your answer.

Question 22

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

Question 23

Companies use a ledger to show all of the increases and decreases in each account along with their balances.

Question 24

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

A)Ledger
B)Journal
C)Income statement
D)Chart of accounts

Question 25

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

Question 26

A chart of accounts provides more detail than a ledger.

Question 27

An asset account is increased by a debit.

Question 28

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

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

Question 29

A chart of accounts is a detailed record of the changes in a particular asset,liability,or equity account during a specified period.

Question 30

A shortened form of the ledger is called a ________.

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

Question 31

Revenues and contributions of the owner in the business increase equity.

Question 32

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

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

Question 33

Which of the following accounts decreases with a debit?

A)Accounts Receivable
B)Notes Payable
C)Cash
D)Rent Expense

Question 34

The Owner's Capital account is a separate account in the ________ category of the accounting equation.

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

Question 35

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

Question 36

A T-account is a summary device with credits posted on the left side of the vertical line.

Question 37

Which of the following is the record holding all the accounts,the changes in those accounts,and their balances?

A)Source document
B)Journal
C)Ledger
D)Trial balance

Question 38

Nuptial Services Company paid the rent for the current month in cash.Which of the following accounts will be used to record the transaction?

A)Prepaid Rent
B)Rent Payable
C)Rent Revenue
D)Rent Expense

Question 39

A liability account is increased by a debit.

Question 40

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

Question 41

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

Question 42

The Owner's Capital account is increased by a debit.

Question 43

The Owner's Withdrawals account is increased by a debit.

Question 44

Which one of the following account groups normally has a debit balance?

A)assets and expenses
B)revenues and expenses
C)liabilities and revenues
D)assets and liabilities

Question 45

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

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

Question 46

Which of the following accounts increases with a debit?

A)Cash
B)Interest Payable
C)Accounts Payable
D)Owner,Capital

Question 47

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 48

Which of the following accounts increases with a credit?

A)Cash
B)Owner,Capital
C)Accounts Receivable
D)Prepaid Expense

Question 49

Which one of the following account groups normally has a credit balance?

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

Question 50

Which of the following accounts decreases with a credit?

A)Cash
B)Owner,Capital
C)Accounts Payable
D)Notes Payable

Question 51

Cash is a(n)________ account and has a normal ________ balance.

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

Question 52

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

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

Question 53

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 54

Which of the following statements is true of the Owner's Capital 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 55

Which of the following statements is true of expenses?

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

Question 56

The balances in the liability and revenue accounts are increased with a credit.

Question 57

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

Question 58

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

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

Question 59

Which one of the following account groups will decrease with a debit?

A)assets and expenses
B)revenues and expenses
C)liabilities and revenues
D)assets and liabilities

Question 60

All asset accounts and equity accounts increase with a debit.

Question 61

The Accounts Receivable account of Rosewood Company has the following postings:
Calculate the ending balance of the account.

A)$33,000 debit
B)$27,000 debit
C)$6,000 credit
D)$21,000 debit

Question 62

For Owner's Capital,the category of account 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 63

In reviewing the T-account for Accounts Payable,you find that the beginning balance is zero,the total increases are $7,400 and the total decreases are $4,900.This means that the ending balance of the account is a credit balance of $2,500.

Question 64

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

Question 65

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

Question 66

Owner's Withdrawals is a(n)________ account that has a normal ________ balance.

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

Question 67

The T-account is a summary device that is shaped like a capital T with debits posted on the left side of the vertical line and credits posted on the right side of the vertical line.

Question 68

Which of the following statements is true of revenues?

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

Question 69

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 70

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

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

Question 71

The Accounts Payable account of Golden Company has the following postings:
Calculate the ending balance of the account.

A)$12,000 credit
B)$16,000 debit
C)$16,000 credit
D)$6,000 debit

Question 72

Transactions are first record in a ________.

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

Question 73

The T-account is a summary device that is shaped like a capital T with debits posted on the right side of the vertical line and credits posted on the left side of the vertical line.

Question 74

Source documents provide the evidence and data for accounting transactions.

Question 75

A compound journal entry has more than two accounts,but the total dollar value of the debits still must equal total dollar value of the credits.

Question 76

When a business records the earning of service revenue,the Service Revenue account is credited.

Question 77

When a business records an accrued utility liability,the Utilities Expense account is credited.

Question 78

In reviewing the T-account for Accounts Receivable,you find that the beginning balance is zero,the total increases are $4,900 and the total decreases are $2,400.This means that the ending balance of the account is a credit balance of $2,500.

Question 79

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

Question 80

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