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

Question 1

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.

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 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

Answer 3

B

Question 4

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 5

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 6

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 7

A trial balance is

A)a listing of all the assets, liabilities, and owner's equity accounts that have balances.
B)a listing of all the accounts that have zero balances.
C)a listing of all the revenue and expense accounts that have balances.
D)all of these.
E)none of these.

Question 8

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 9

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 10

Which of the following is an asset account?

A)Insurance Expense
B)Advertising Expense
C)Office Equipment
D)Sales
E)None of these

Question 11

A debit may signify a decrease in a(n)

A)liability account.
B)asset account.
C)revenue account.
D)liability and a revenue account.
E)asset and a revenue account.

Question 12

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 13

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 14

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.

Question 15

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 16

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 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

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 19

The normal balance of an account is on the

A)plus side.
B)left side.
C)debit side.
D)right side.
E)credit side.

Question 20

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.

Question 21

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 22

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 23

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 24

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 25

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 26

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 27

Which of the following is correct concerning a T account?

A)The left side is the decrease side for assets.
B)The right side is the decrease side for liabilities.
C)The right side is the increase side for revenue.
D)The left side is the decrease side for expenses.

Question 28

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 29

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 30

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 31

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 32

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 33

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 34

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 35

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 36

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 37

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 38

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 39

The Accounts Receivable T account shows the following $250, debit
$1,250, debit
$300, credit
$250, credit
What is the balance of the account?

A)$1,500, debit
B)$550, credit
C)$950, debit
D)$950, credit
E)$2,050, debit

Question 40

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 41

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 42

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 43

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 44

A ______________ means that the digits of a number have been switched around.

A)slide
B)matching error
C)transposition
D)none of the answers listed

Question 45

The accountant recorded accounts payable as $45,000 when it should have been recorded as $4,500. This is an example of a ________________.

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

Question 46

When total expenses exceeds total revenues, a __________ results.

A)net income
B)net loss
C)break-even
D)profit

Question 47

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 48

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 49

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 50

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

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

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 53

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 54

The ____________ shows total revenue minus total expenses.

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

Question 55

An increase in an expense is recorded as a debit.

Question 56

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 57

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

Question 58

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 59

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 60

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 61

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

Question 62

Match the terms below with the correct definitions.

Listing of the ending balances of all ledger accounts that proves the equality of total debits and credits

Question 63

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

Question 64

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

Question 65

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 66

Revenue has the effect of decreasing owner's equity.

Question 67

Match the terms below with the correct definitions.

Totaling each side of a T account

Question 68

Match the terms below with the correct definitions.

The left side of a T account

Question 69

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

Question 70

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 71

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

Question 72

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

Question 73

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 74

A trial balance checks the equality of debits and credits.

Question 75

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 76

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

Question 77

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

Question 78

The left side is always the debit side.

Question 79

Match the terms below with the correct definitions.

A recording error involving the switching around of the digits of a number

Question 80

Match the terms below with the correct definitions.

Plus side of any T account