Question 1

Regardless of the business activity recorded, the left side of an account is the debit side and the right side is the credit side.

Accepted Answer

In double-entry bookkeeping, the left side of an account is always the debit side, and the right side is always the credit side, regardless of the type of account or the transaction being recorded.

Question 2

All accounts have normal balances on the debit side.

Accepted Answer

Some accounts, like liabilities, equity, and revenue accounts, have normal balances on the credit side, while assets and expenses have normal balances on the debit side.

Question 3

The normal balance in a revenue account is a credit balance.

Accepted Answer

Revenue accounts increase with credit entries, so their normal balance is a credit balance.

Question 4

Asset accounts are increased with debit entries.

Accepted Answer

Asset accounts increase with debit entries because they follow the accounting equation where assets = liabilities + equity, and debits increase assets while credits decrease them.

Question 5

Expense accounts are increased with credit entries.

Accepted Answer

Expense accounts are increased with debit entries, not credit entries.

Question 6

The normal balance for an account is the side in which increases are recorded.

Accepted Answer

The normal balance of an account refers to the side (debit or credit) where increases in that account type are recorded, according to the rules of double-entry bookkeeping.

Question 7

The typical form of a T-account shows debits on the right and credits on the left.

Accepted Answer

The typical form of a T-account shows debits on the left and credits on the right.

Question 8

A compound entry does not necessarily have to maintain total debits equal to total credits.

Accepted Answer

In double-entry bookkeeping, a compound entry, like any other entry, must maintain total debits equal to total credits to keep the accounting equation balanced.

Question 9

The analysis of each transaction must result in equal amounts being recorded as debits and as credits.

Accepted Answer

This statement is true because in accounting, the double-entry system requires that for every transaction, the total debits must equal the total credits to maintain the balance in the accounting equation.

Question 10

Transactions are first recorded in a journal and then posted to the general ledger.

Accepted Answer

Transactions are initially recorded in chronological order in a journal, which is also known as the book of first entry. These transactions are then systematically posted to the general ledger, where they are organized by account.

Question 11

Transactions are first recorded in the general ledger and then posted to a journal.

Accepted Answer

Transactions are first recorded in a journal and then posted to the general ledger.

Question 12

Each transaction entered in a general journal must have equal dollar amounts of debits and credits.

Accepted Answer

This is because of the double-entry accounting system, which requires that every transaction affects at least two accounts in a way that the total debits equal the total credits, maintaining the accounting equation's balance.

Question 13

A trial balance is a list of the account titles in the general ledger with their respective debit and credit balances.

Accepted Answer

A trial balance is indeed a list of all the account titles in the general ledger along with their respective debit or credit balances, used to ensure that the total debits equal the total credits in the financial records.

Question 14

One reason for preparing a trial balance is to determine if the debits and credits in the general ledger are equal.

Accepted Answer

A trial balance is prepared to ensure that the total debits equal the total credits in the general ledger, indicating that the accounts are in balance.

Question 15

One reason for preparing a trial balance is to make sure that all of the period's transactions have been recorded.

Accepted Answer

The primary purpose of preparing a trial balance is to check the mathematical accuracy of the bookkeeping system by ensuring that debits equal credits after all transactions have been recorded.

Question 16

The purpose of an unadjusted trial balance is to be sure the general ledger is in balance.

Accepted Answer

An unadjusted trial balance is prepared to check the mathematical accuracy of the accounts in the general ledger, ensuring that total debits equal total credits before making any adjustments.

Question 17

The trial balance prepared before the general ledger accounts are adjusted is called an adjusted trial balance.

Accepted Answer

The trial balance prepared before the general ledger accounts are adjusted is called an unadjusted trial balance. The adjusted trial balance is prepared after adjusting entries are made and posted to the ledger.

Question 18

An unadjusted trial balance shows the general ledger account balances before any adjustments have been made.

Accepted Answer

An unadjusted trial balance is prepared to check the equality of debits and credits as recorded in the general ledger before any adjusting entries are made for accruals, allocations, estimations, and other necessary adjustments for financial statement preparation.

Question 19

Each adjusting entry affects a balance sheet account and an income statement account.

Accepted Answer

Adjusting entries are made in the accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred. Each adjusting entry typically affects one balance sheet account (such as Accounts Receivable, Prepaid Expenses, or Accrued Liabilities) and one income statement account (such as Sales Revenue, Insurance Expense, or Interest Income), ensuring that both the balance sheet and the income statement reflect the correct amounts.

Question 20

An adjusted trial balance is a listing of all the year-end balance sheet accounts, since all the income statement accounts have been closed to zero.

Accepted Answer

An adjusted trial balance includes all the accounts, both balance sheet and income statement accounts, with their adjusted balances, not just the balance sheet accounts. Income statement accounts are not closed to zero until after the adjusted trial balance is prepared.

Quiz 13: Appendix A: The Language of Accountants: Debits and Credits

Regardless of the business activity recorded, the left side of an account is the debit side and the right side is the credit side.

All accounts have normal balances on the debit side.

The normal balance in a revenue account is a credit balance.

Asset accounts are increased with debit entries.

Expense accounts are increased with credit entries.

The normal balance for an account is the side in which increases are recorded.

The typical form of a T-account shows debits on the right and credits on the left.

A compound entry does not necessarily have to maintain total debits equal to total credits.

The analysis of each transaction must result in equal amounts being recorded as debits and as credits.

Transactions are first recorded in a journal and then posted to the general ledger.

Transactions are first recorded in the general ledger and then posted to a journal.

Each transaction entered in a general journal must have equal dollar amounts of debits and credits.

A trial balance is a list of the account titles in the general ledger with their respective debit and credit balances.

One reason for preparing a trial balance is to determine if the debits and credits in the general ledger are equal.

One reason for preparing a trial balance is to make sure that all of the period's transactions have been recorded.

The purpose of an unadjusted trial balance is to be sure the general ledger is in balance.

The trial balance prepared before the general ledger accounts are adjusted is called an adjusted trial balance.

An unadjusted trial balance shows the general ledger account balances before any adjustments have been made.

Each adjusting entry affects a balance sheet account and an income statement account.

An adjusted trial balance is a listing of all the year-end balance sheet accounts, since all the income statement accounts have been closed to zero.