Deck 2: T Accounts, Debits and Credits, Trial Balance, and Financial Statements

Question 1

The asset that a business enterprise creates when it maintains accounts for its charge customers is

A) Accounts Payable.
B) Drawing.
C) Accounts Receivable.
D) Capital.
E) none of these.

Answer 1

C

Question 2

Which of the following describes the classification and normal balance of the Income from Services account?

A) Capital, debit
B) Revenue, credit
C) Asset, credit
D) Asset, debit
E) Expense, debit

Answer 2

B

Question 3

The second step in the analytical phase of accounting is

A) to determine whether there is an increase or a decrease in the accounts.
B) to determine which accounts are involved.
C) to formulate the entry as a debit to one account and as a credit to another account.
D) to identify the classification of the accounts involved.
E) none of these.

Answer 3

D

Question 4

The receipt of cash on account from a customer should be recorded as

A) a debit to Cash and a credit to Accounts Payable.
B) a debit to Cash and a credit to Income from Services.
C) a debit to Cash and a credit to Accounts Receivable.
D) a debit to Cash and a credit to the Capital account.
E) none of these.

Question 5

A list of account balances in two columns-one labelled "Debit" and one labelled "Credit" is the:

A) trial balance.
B) ledger balance.
C) balance sheet.
D) journal balance.
E) owner's equity statement.

Question 6

A credit may result in

A) an increase in a liability account.
B) an increase in a revenue account.
C) a decrease in an asset account.
D) an increase in the Capital account.
E) all of these.

Question 7

Which of the following entries records the withdrawal of cash for personal use by D. Bill, the owner of a business?

A) Debit Cash and credit D. Bill, Drawing
B) Debit Cash and credit Salary Expense
C) Debit Salary Expense and credit Cash
D) Debit D. Bill, Drawing and credit Cash
E) None of these

Question 8

Which of the following classifications of accounts has/have a normal credit balance?

A) Drawing
B) Revenues
C) Liabilities
D) Revenues and liabilities
E) All of these

Question 9

A business buys office equipment for cash. What effect will this transaction have on the accounts?

A) Debit an asset account and credit an expense account
B) Debit an asset account and credit an asset account
C) Debit an expense account and credit an asset account
D) Debit a liability account and credit an asset account
E) None of these

Question 10

If a $47 cash purchase of supplies is recorded as a $57 debit to Supplies Expense and a $57 credit to Cash, the result will be that

A) the trial balance will be out of balance.
B) the Supplies Expense account will be understated.
C) the Cash account will be overstated.
D) Supplies Expense will be overstated and Supplies will be understated.
E) none of these will be true.

Question 11

The trial balance will not expose which of the following problems?

A) Recording half an entry
B) Leaving out an entire entry
C) Recording both halves of an entry on the same side
D) Recording half an entry and leaving out an entire entry
E) Recording half an entry and recording both halves of an entry on the same side

Question 12

A purchase of supplies on account should be recorded as

A) a debit to Supplies and a credit to Cash.
B) a debit to Accounts Payable and a credit to Supplies.
C) a debit to Supplies and a credit to Accounts Payable.
D) a debit to Supplies Expense and a credit to Accounts Receivable.
E) none of these.

Question 13

When a T account has several items on both sides, the balance of the account is written

A) on the side with the greatest number of items.
B) on the side with the least number of items.
C) on the side with the larger total.
D) on the side with the smaller total.
E) in none of these locations.

Question 14

Which of the following describes the classification and normal balance of H. Gale, Capital?

A) Asset, debit
B) Revenue, credit
C) Owner's equity, debit
D) Expense, debit
E) None of these

Question 15

The plus side of a T account represents the:

A) normal balance of that account.
B) double balance of that account.
C) trial balance of that account.
D) footings balance of that account.
E) standard balance of that account.

Question 16

A credit may result in

A) an increase in an asset account.
B) a decrease in the Capital account.
C) an increase in a liability account.
D) a decrease in a liability account.
E) none of these.

Question 17

To locate an error in a trial balance,

A) re-add.
B) look for the correct location of normal balances.
C) verify figures transferred from the account to the trial balance.
D) check footings and balances of the accounts.
E) do all of these.

Question 18

Which of the following accounts decrease when they are debited?

A) Assets and Drawing
B) Drawing and Capital
C) Expenses and Assets
D) Capital and Liabilities
E) Liabilities and Expenses

Question 19

An example of an asset account is:

A) Wages Payable.
B) Purchases.
C) Accounts Receivable.
D) Sales.
E) Rental Income.

Question 20

A debit may result in

A) an increase in an expense account.
B) an increase in an asset account.
C) a decrease in a liability account.
D) a decrease in a revenue account.
E) all of these.

Question 21

In a T account form, the left side is the increase side for:

A) liabilities.
B) capital.
C) assets.
D) revenue.

Question 22

Which of the following is not true concerning T accounts?

A) The right side of a revenue account is an increase.
B) The left side of an expense account is an increase.
C) The left side of an asset account is an increase.
D) The left side of a liability account is an increase.

Question 23

The ___________ are the totals of each side of a T account that is normally recorded in small, pencil-written figures.

A) balances
B) footings
C) figures
D) estimates

Question 24

Accounts Payable would be shown on the ___________________.

A) debit side of the trial balance
B) credit side of the trial balance
C) not on the trial balance
D) debit and credit side of the trial balance

Question 25

The Accounts Receivable T account shows the following debit and credit amounts:
$300, debit
$1,000, debit
$500, credit
$120, credit
What is the balance of the account?

A) $1,200, debit
B) $500, credit
C) $680, debit
D) $900, credit
E) $2,000, debit

Question 26

Which of the following is true?

A) An asset account would be decreased with a debit.
B) A liability account would be increased with a debit.
C) A revenue account would be increased with a credit.
D) An expense account would be increased with a credit.

Question 27

Utilities Expense would be shown on the ______________.

A) debit side of the trial balance
B) credit side of the trial balance
C) not on the trial balance
D) debit and credit side of the trial balance

Question 28

Accounts Receivable would be shown on the __________________.

A) debit side of the trial balance
B) credit side of the trial balance
C) not on the trial balance
D) debit and credit side of the trial balance

Question 29

The last step in analyzing a business transaction is

A) decide which accounts are involved.
B) check to see if the equation is in balance.
C) write the transaction as a debit and credit.
D) classify the accounts involved.

Question 30

Ready Company received a bill for advertising. The accountant would record a

A) credit to cash.
B) credit to accounts receivable.
C) credit to accounts payable.
D) credit to advertising expense.

Question 31

A _______________ is a transaction that requires more than one debit or more than one credit to be recorded.

A) complex entry
B) double entry
C) deluxe entry
D) compound entry

Question 32

Income from Services would be shown on the ______________.

A) debit side of the trial balance
B) credit side of the trial balance
C) not on the trial balance
D) on both the debit and credit side of the trial balance

Question 33

Jackson Company received cash on account from customers, $2,300. The accountant would record a

A) debit to income from services, $2,300.
B) credit to income from services, $2,300.
C) debit to accounts receivable, $2,300.
D) credit to accounts receivable, $2,300.
E) credit to cash, $2,300.

Question 34

The heading of all financial statements include

A) name of the company.
B) title of the financial statement.
C) period of time covered by the financial statement.
D) all of the answers listed.

Question 35

Which of the following is correct, assuming the following transaction: R. Dirk invested $20,000 cash in the business.

A) Cash is debited.
B) Cash is credited.
C) R. Dirk, Capital is debited.
D) Income from Services is credited.

Question 36

Which of the following is correct?

A) Debit is the normal balance of the accounts payable account.
B) Credit is the normal balance of the accounts receivable account.
C) Debit is the normal balance of the Income from Services account.
D) Debit is the normal balance of the Drawing account.

Question 37

Which of the following is not true?

A) The capital account would be increased with a debit.
B) The drawing account would be increased with a debit.
C) An asset account would be decreased with a credit.
D) A liability account would be increased with a credit.

Question 38

The Accounts Payable T account shows the following
$1,200, debit
$3,500, debit
$8,240, credit
$100, credit
What is the balance of the account?

A) $8,340, credit
B) $8,340, debit
C) $4,700, debit
D) $3,640, debit
E) $3,640, credit

Question 39

Which of the following is correct, assuming the following transaction: Nixon Company sold services on account.

A) Cash is credited.
B) Accounts Receivable is credited.
C) Income from Services is credited.
D) Cash is debited.

Question 40

Which of the following is correct, assuming the following transaction: Kennedy Company received and paid the rent for the month.

A) Rent Expense is debited.
B) Cash is debited.
C) Rent Expense is credited.
D) Accounts Payable is debited.

Question 41

Davis Company has the following accounts and balances at the end of the year:
Cash, $1,200
Accounts Receivable, $280
Office Equipment, $3,000
Accounts Payable, $1,400
Income from Services, $3,500
Rent Expense, $670
Salaries Expense, $1,000
R.Davis, Capital at the beginning of the year was $2,050. Rob Davis also withdrew $800 from the company during the year. What is the amount of total assets reported on the balance sheet?

A) $1,480
B) $9,800
C) $3,080
D) $4,480

Question 42

Rent Expense is reported on which financial statement?

A) income statement
B) balance sheet
C) statement of owner's equity
D) none of the answers listed

Question 43

Net income results when:

A) total revenue is less than total expenses over the period.
B) total revenue exceeds total expenses over the period.
C) total revenue is less than total liabilities over the period.
D) total revenue exceeds total liabilities over the period.

Question 44

The time period on the ______________ represents only one date.

A) income statement
B) statement of owner's equity
C) balance sheet
D) none of the answers listed

Question 45

An error caused by recording $25,000 as $2,500 is a(n):

A) switching error.
B) embezzlement.
C) slide.
D) transposition.

Question 46

The ________________ shows the financial position of a company.

A) income statement
B) balance sheet
C) statement of owner's equity
D) none of the answers listed

Question 47

Davis Company has the following accounts and balances at the end of the year:
Cash, $1,200
Accounts Receivable, $280
Office Equipment, $3,000
Accounts Payable, $1,400
Income from Services, $3,500
Rent Expense, $670
Salaries Expense, $1,000
R. Davis, Capital at the beginning of the year was $2,050. Rob Davis also withdrew $800 from the company during the year. What is net income for the year?

A) $1,830
B) $3,500
C) $1,030
D) $5,080

Question 48

The _______________ of a company is the resources owned by the organization at a point in time, offset by the claims against those resources and owner's equity.

A) net income
B) financial statement
C) net loss
D) financial position

Question 49

Which of the following is correct concerning the time period reported on financial statements?

A) The balance sheet is reported as of a period of time.
B) The income statement is reported as of a specific date.
C) The statement of owner's equity is reported as of a specific date.
D) The income statement is reported as of a period of time.

Question 50

Errors can occur for which of the following reason(s)?

A) Arithmetic
B) Recording only half an entry
C) Recording two debits and no credits
D) Recording incorrect amounts
E) All of the answers listed

Question 51

The _____________ of the balance sheet requires that the assets are placed at the top and liabilities and owner's equity are placed below.

A) financial position
B) report form
C) horizontal form
D) vertical form

Question 52

The order the financial statements are prepared is as follows:

A) statement of owner's equity, income statement, balance sheet
B) income statement, balance sheet, statement of owner's equity
C) income statement, statement of owner's equity, balance sheet
D) balance sheet, income statement, statement of owner's equity

Question 53

The accountant recorded income from services as $4,500 when it should have been recorded as $4,050. This is an example of a ________________.

A) matching error
B) footing
C) slide
D) transposition

Question 54

Income from Services is reported on which financial statement?

A) income statement
B) statement of owner's equity
C) balance sheet
D) none of the answers listed

Question 55

Accounts Payable is reported on which financial statement?

A) balance sheet
B) income statement
C) statement of owner's equity
D) none of the answers listed

Question 56

Owner withdrawals are reported on which financial statement?

A) statement of owner's equity
B) balance sheet
C) income statement
D) none of the answers listed

Question 57

The ________________ shows how and why the owner's equity account has changed over a stated period of time.

A) balance sheet
B) income statement
C) statement of owner's equity
D) statement of change

Question 58

Which of the following refers to interchanging, or switching around, digits during the recording of a number?

A) A compound error
B) A matching error
C) A transposition
D) A slide

Question 59

Which of the following statements shows the difference in total revenue and total expenses and reports the performance of a business?

A) A balance sheet
B) An income statement
C) A statement of owner's equity
D) A funds flow statement

Question 60

Davis Company has the following accounts and balances at the end of the year:
Cash, $1,200
Accounts Receivable, $280
Office Equipment, $3,000
Accounts Payable, $1,400
Income from Services, $3,500
Rent Expense, $670
Salaries Expense, $1,000
R. Davis, Capital at the beginning of the year was $2,050. Rob Davis also withdrew $800 from the company during the year. What is R. Davis, Capital, at the end of the year?

A) $1,830
B) $3,080
C) $5,550
D) $3,880

Question 61

An entry to Accounts Payable will be on the left side of the account if there is a decrease and on the right side of the account if there is an increase.

Question 62

Withdrawals of assets from a business by the owners are considered to be expenses.

Question 63

The connecting link between the statement of owner's equity and the balance sheet is the owner's withdrawals.

Question 64

If equipment is bought by paying $200 as a down payment and the remaining $400 in 30 days, total liabilities are increased by $200.

Question 65

A credit always means an entry on the right side of an account.

Question 66

If equipment costing $930 is bought by paying $300 as a down payment and the remaining $630 in 30 days, owner's equity is increased by $930.

Question 67

Recording $41.25 as $412.50 is an example of a transposition.

Question 68

Recording $520 as $5.20 is an example of a slide.

Question 69

Revenue has the effect of decreasing owner's equity.

Question 70

In any transaction, the total dollar amount of debits must equal the total dollar amount of credits.

Question 71

A credit signifies increases in liabilities, capital, and revenue, and decreases in assets, drawing, and expenses.

Question 72

A verification of the equality of debits and credits in the ledger at the end of a fiscal period is called a balance sheet.

Question 73

The left side is always the debit side.

Question 74

Indicate whether each of the following changes in accounts would be a debit (D) or credit (C) entry.

Question 75

Classify each of the following items as to whether they would appear on a balance sheet (BS), income statement (IS), or neither (N).
___Accounts Payable
___Accounts Receivable
___Advertising Expense
___Cash
___Equipment
___Income from Tours
___Increase in Capital
___Investment during month
___J. Collins, Capital
___J. Collins, Drawing
___Frepaid Insurance
___Wages Expense

Question 76

An account balance is the difference between total debits and total credits in an account.

Question 77

A trial balance checks the equality of debits and credits.

Question 78

Accounts Receivable is an asset account whose normal balance is a credit.

Question 79

A transaction with more than one debit and/or more than one credit is called a compound entry.

Question 80

An increase in an expense is recorded as a debit.