Deck 2: Analyzing Transactions

Question 1

The cash account will always be debited

Answer 1

False

Question 2

The T account got its name because it resembles the letter "T."

Answer 2

True

Question 3

Accounts are records of increases and decreases in individual financial statement items.

Answer 3

True

Question 4

A credit to the cash account will increase the account.

Question 5

Depending on the account title, the right side of the account is referred to as the debit side.

Question 6

The unearned revenues account is an example of a liability.

Question 7

To determine the balance in a prepaid expense account, subtract credits from debits.

Question 8

A chart of accounts is a listing of accounts that make up the journal.

Question 9

An account has three parts to it; a title, an increase side, and a decrease side.

Question 10

The recording of cash receipts to the cash account will be done by debiting the account.

Question 11

The chart of accounts should be the same for each business.

Question 12

Consuming goods and services in the process of generating revenues results in expenses.

Question 13

Prepaid expenses are an example of an expense.

Question 14

The recording of cash payments from the cash account is done by entering the amount as a credit.

Question 15

The dividends account is an example of an expense.

Question 16

Accounts in the ledger are usually maintained in alphabetical order.

Question 17

The right hand side of a T account is known as a debit and the left hand side is known as a credit.

Question 18

Debiting the cash account will increase the account.

Question 19

A debit is abbreviated as Db and a credit is abbreviated as Cr.

Question 20

Accounts payable are accounts that you expect will be paid to you.

Question 21

The accounts payable account is listed in the chart of accounts as an asset.

Question 22

Liability accounts are increased by debits.

Question 23

The balance of the account can be determined by adding all of the debits, adding all of the credits, and adding the amounts together.

Question 24

Expense accounts are increased by credits.

Question 25

A dividends account records amounts paid to stockholders.

Question 26

The process of recording a transaction in the journal is called journalizing.

Question 27

The double-entry accounting system records each transaction twice.

Question 28

Transactions are initially entered into a record called a journal.

Question 29

Transactions are listed in the journal chronologically.

Question 30

Journalizing transactions using the double-entry bookkeeping system will eliminate fraud.

Question 31

Journalizing is the process of entering amounts in the ledger.

Question 32

When an account receivable is collected in cash, the total assets of the business increase.

Question 33

When a company issues new shares of stock, the capital stock account increases due to revenue being earned.

Question 34

Journalizing eliminates fraud.

Question 35

Revenues are equal to the difference between cash receipts and cash payments.

Question 36

The increase side of all accounts is the normal balance.

Question 37

When an accounts payable account is paid in cash, company expenses increase.

Question 38

Retained earnings will be reduced by the amount in the dividends account.

Question 39

Liabilities are debts owed by the business entity.

Question 40

Expenses use up assets or consume services in the process of generating revenues.

Question 41

The normal balance of a capital stock account is a debit.

Question 42

The normal balance of an expense account is a credit.

Question 43

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

Question 44

Liabilities are increased with debits and decreased with credits.

Question 45

Normal balances appear on the side that increases the account balance.

Question 46

The normal balance of the dividends account is a debit.

Question 47

Dividends decrease retained earnings and are listed on the income statement as a deduction from revenue.

Question 48

When a business receives a bill from the utility company, no entry should be made until the invoice is paid.

Question 49

The normal balance of revenue accounts is a credit.

Question 50

Revenue accounts are increased by credits.

Question 51

A transaction that is recorded in the journal is called a journal entry.

Question 52

The post reference notation used in the ledger is the account number.

Question 53

For a month's transactions for a typical medium-sized business, the accounts payable account is likely to have only credit entries.

Question 54

Assets are increased with debits and decreased with credits.

Question 55

Retained earnings account increases with debits.

Question 56

The post reference notation used in the journal is the page number.

Question 57

For a month's transactions for a typical medium-sized business, the salary expense account is likely to have only credit entries.

Question 58

The journal includes both debit and credit accounts for each transaction.

Question 59

Journal entries can have more than two accounts as long as the debits equal the credits.

Question 60

Debits will increase Unearned Revenues and Revenues.

Question 61

Even when a trial balance is in balance, there may be errors in the individual accounts.

Question 62

Revenue should be recognized when

A) cash is received
B) the service is performed
C) the customer places an order
D) the customer charges an order

Question 63

A group of related accounts that make up a complete unit is called a trial balance.

Question 64

A trial balance determines the accuracy of the numbers.

Question 65

The process of transferring the debits and credits from the journal entries to the accounts is known as "updating the accounts".

Question 66

Once journal entries are posted to accounts, each account will show a new balance after each entry.

Question 67

The gross increases in retained earnings attributable to business activities are called

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

Question 68

The order of the flow of accounting data is (1) record in the ledger, (2) record in the journal, (3) prepare the financial statements.

Question 69

Journalizing a transaction with both the debit and the credit for $69 instead of $96 will cause the trial balance to be out of balance.

Question 70

The erroneous moving of an entire number one or more spaces to the right or left, such as writing $85 as $850, is called a transposition.

Question 71

Posting a transaction twice will cause the trial balance totals to be equal.

Question 72

If the trial balance is in balance, it can be assumed that all journal entries were posted correctly and no errors were made.

Question 73

Which of the following accounts is a stockholders' equity account?

A) Cash
B) Accounts Payable
C) Prepaid Insurance
D) Dividends

Question 74

The totals at the bottom of the trial balance and the totals at the bottom of the balance sheet both show equality and balancing, and therefore should be equal.

Question 75

Posting a part of a transaction to the wrong account will cause the trial balance totals to be unequal.

Question 76

Accounts are classified in the ledger

A) chronologically
B) alphabetically
C) in accordance with their appearance in the financial statements
D) so that accounts used most often are listed first

Question 77

A proof of the equality of debits and credits in the ledger at the end of an accounting period is called a balance sheet.

Question 78

Accounts

A) do not reflect money amounts
B) are not used by entities that manufacture products
C) are records of increases and decreases in individual financial statement items
D) are only used by large entities with many transactions

Question 79

A notation in the post reference column of the general journal indicates that the amount has been posted to the ledger.

Question 80

The erroneous arrangement of digits, such as writing $45 as $54, is called a slide.