Question 1

The normal balance of all liability accounts is a debit.

Accepted Answer

The normal balance of liability accounts is a credit, not a debit.

Question 2

A simple journal entry requires only one debit to an account and one credit to an account.

Accepted Answer

A simple journal entry requires only one debit to an account and one credit to an account.

Question 3

The use of different accounts is necessary to allow users to analyze the information.

Accepted Answer

Different accounts are used to segregate information and provide controlled access. This allows for better analysis of data and prevents unauthorized access to sensitive information.

Question 4

The double-entry system of accounting ensures that all the debits will equal all the credits in an entry.

Accepted Answer

This is the fundamental principle of double-entry accounting. Every transaction will have an equal amount of debits and credits.

Question 5

For transactions to be recorded correctly, debits must always be greater than credits.

Accepted Answer

This statement is false. In accounting, debits and credits represent increases and decreases in different types of accounts, and the amount of the debit does not necessarily have to be greater than the amount of the credit. Both amounts could be equal, or the credit could be greater than the debit, depending on the type of transaction and accounts involved.

Question 6

The number and types of accounts used by different business enterprises are the same if generally accepted accounting principles are being followed by the enterprises.

Accepted Answer

The specific number and types of accounts used by different business enterprises can vary based on factors such as industry, size, and specific accounting practices. However, they should still follow the generally accepted accounting principles.

Question 7

Transactions are entered in the trial balance and then transferred to journals.

Accepted Answer

Transactions are first recorded in journals and then transferred to the trial balance.

Question 8

The normal balance for the cash account is a credit.

Accepted Answer

The normal balance for the cash account is a debit.

Question 9

An asset is increased by a debit.

Accepted Answer

According to the rules of accounting, an asset is increased by debiting it.

Question 10

The accounting cycle is a series of steps followed by accountants in preparing financial statements.

Accepted Answer

The accounting cycle is a standard process followed by accountants in preparing financial statements. It consists of a series of steps, including identifying transactions, recording transactions in journals, posting journals to the ledger, preparing an unadjusted trial balance, making adjusting entries, preparing an adjusted trial balance, preparing financial statements, closing the books, and preparing a post-closing trial balance.

Question 11

Source documents can provide evidence that a transaction has occurred.

Accepted Answer

Source documents, such as receipts, invoices, and purchase orders, can provide evidence that a transaction has occurred. They are important for record-keeping and auditing purposes.

Question 12

The normal balance of a revenue account is a credit.

Accepted Answer

The normal balance of a revenue account is a credit because revenue increases the owner's equity or the company's net income, which is a positive item in the accounting equation. Therefore, revenue accounts are increased by credits and decreased by debits.

Question 13

The drawings account is a subdivision of the owner's capital account and appears as an expense on the income statement.

Accepted Answer

The drawings account is a subdivision of the owner's capital account, but it is not an expense and does not appear on the income statement. Drawings represent withdrawals made by the owner from the business for personal use and are recorded as a reduction of cash and of the owner's capital account.

Question 14

A transaction must be analyzed to determine which accounts it will effect.

Accepted Answer

This is true. Every transaction involves at least two accounts, one account being debited and the other account being credited. The accounts that are affected depend on the nature of the transaction.

Question 15

The normal balance in an asset account is a debit.

Accepted Answer

The normal balance in an asset account is a debit, meaning that an increase in an asset account is recorded as a debit and a decrease is recorded as a credit.

Question 16

The first step in the recording process is to enter the transaction information in a journal.

Accepted Answer

The answer of The first step in the recording process...

Question 17

All business transactions must have a corresponding journal entry.

Accepted Answer

The answer of All business transactions must have a corresponding...

Question 18

A debit to an asset account indicates an increase in that account.

Accepted Answer

A debit to an asset account indicates an increase because assets are typically debited when they are received, acquired, or increased in value.

Question 19

Each time a transaction is recorded; one side of the entry will be to cash.

Accepted Answer

Each transaction does not necessarily involve cash. It could involve other forms of payment or exchange of assets.

Question 20

An account can have debit entries and credit entries.

Accepted Answer

An account can have both debit entries and credit entries. Debit indicates an increase in assets or a decrease in liabilities, while credit indicates a decrease in assets or an increase in liabilities.

Quiz 2: The Recording Process

The normal balance of all liability accounts is a debit.

A simple journal entry requires only one debit to an account and one credit to an account.

The use of different accounts is necessary to allow users to analyze the information.

The double-entry system of accounting ensures that all the debits will equal all the credits in an entry.

For transactions to be recorded correctly, debits must always be greater than credits.

The number and types of accounts used by different business enterprises are the same if generally accepted accounting principles are being followed by the enterprises.

Transactions are entered in the trial balance and then transferred to journals.

The normal balance for the cash account is a credit.

An asset is increased by a debit.

The accounting cycle is a series of steps followed by accountants in preparing financial statements.

Source documents can provide evidence that a transaction has occurred.

The normal balance of a revenue account is a credit.

The drawings account is a subdivision of the owner's capital account and appears as an expense on the income statement.

A transaction must be analyzed to determine which accounts it will effect.

The normal balance in an asset account is a debit.

The first step in the recording process is to enter the transaction information in a journal.

All business transactions must have a corresponding journal entry.

A debit to an asset account indicates an increase in that account.

Each time a transaction is recorded; one side of the entry will be to cash.

An account can have debit entries and credit entries.