Question 1

Wisconsin Rentals purchased office supplies on credit.The general journal entry made by Wisconsin Rentals will include a:
A)Debit to Accounts Payable
B)Debit to Accounts Receivable
C)Credit to Cash
D)Credit to Accounts Payable
E)Credit to Retained Earnings

Accepted Answer

Wisconsin Rentals purchased office supplies on credit, which means they owe money to the supplier, and thus, there is an increase in their accounts payable. Therefore, the journal entry must include a debit to Accounts Payable. Additionally, since they did not pay for the supplies and incurred a liability, there is no credit to cash or retained earnings, and a credit to Accounts Payable is required to complete the transaction. Therefore, the best choice is D, a credit to Accounts Payable.

Question 2

On November 30,a company had an Accounts Receivable balance of $5,100.During the month of December,total credits to Accounts Receivable were $76,000 from customer payments.The December 31 Accounts Receivable balance was $43,000.What was the amount of credit sales during December?
A)$8,100
B)$27,900
C)$70,900
D)$76,000
E)$113,900

Accepted Answer

Normal balance = debit

Question 3

Which of the following statements is incorrect?
A)The normal balance of accounts receivable is a debit
B)The normal balance of dividends is a debit
C)The normal balance of unearned revenues is a credit
D)The normal balance of an expense account is a credit
E)The normal balance of common stock is a credit

Accepted Answer

The normal balance of an expense account is a debit, not a credit. Expenses are debited to increase them and credited to decrease them.

Question 4

On October 31,a company's Cash account had a normal balance of $7,000.During October,the account was debited for a total of $4,250 and credited for a total of $5,340.What was the balance in the Cash account at the beginning of October?
A)$0 balance
B)$1,090 debit balance
C)$2,590 credit balance
D)$8,090 debit balance
E)$9,590 credit balance

Accepted Answer

Normal balance = debit

Question 5

Double-entry accounting is an accounting system:
A)That records each transaction twice
B)That records the effects of transactions and other events in at least two accounts with equal debits and credits
C)In which the impact of each transaction is recorded in two or more accounts but that could include two debits and no credits
D)That may only be used if T-accounts are used
E)That insures that errors never occur

Accepted Answer

Double-entry accounting is a system in which the impact of each transaction and other events are recorded in at least two accounts with equal debits and credits. This system ensures accuracy and provides a reliable method of tracking financial transactions. The other options are incorrect, as double-entry accounting may include more than two accounts and errors can still occur if not properly executed. The use of T-accounts is not a requirement for double-entry accounting, but a visual aid often used to record transactions.

Question 6

A credit entry:
A)Increases asset and expense accounts and decreases liability,common stock and revenue accounts
B)Is always a decrease in an account
C)Decreases asset and expense accounts and increases liability,common stock and revenue accounts
D)Is recorded on the left side of a T-account
E)Is always an increase in an account

Accepted Answer

A credit entry decreases asset and expense accounts, and increases liability, common stock, and revenue accounts. This is in accordance with the double-entry accounting system where debits and credits must balance.

Question 7

On September 30,the Cash account of Value Company had a normal balance of $5,000.During September,the account was debited for a total of $12,200 and credited for a total of $11,500.What was the balance in the Cash account at the beginning of September?
A)A $0 balance
B)A $4,300 debit balance
C)A $4,300 credit balance
D)A $5,700 debit balance
E)A $5,700 credit balance

Accepted Answer

Normal balance = debit

Question 8

Which of the following statements is correct?
A)The left side of a T-account is the credit side
B)Debits decrease asset and expense accounts and increase liability,equity and revenue accounts
C)The left side of a T-account is the debit side
D)Credits increase asset and expense accounts and decrease liability,equity and revenue accounts
E)In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction

Accepted Answer

The left side of a T-account is always the debit side, while the right side is always the credit side. This is a fundamental accounting principle. Option A is incorrect because it states the opposite. Option B is incorrect because it confuses debits and credits. Option D is incorrect because it states the opposite. Option E is true, but not directly related to the question being asked.

Question 9

An account balance is:
A)The total of the credit side of the account
B)The total of the debit side of the account
C)The difference between the total debits and total credits for an account including the beginning balance
D)Assets = liabilities + equity
E)Always a credit

Accepted Answer

An account balance is the difference between the total debits and total credits for an account including the beginning balance. It can be positive (debit balance) or negative (credit balance). A and B are not correct as they only represent one side of the account. D is the fundamental accounting equation and not related to account balance. E is also incorrect as the account balance can be either a credit or a debit balance.

Question 10

Rocky Industries received its telephone bill in the amount of $300 and immediately paid it.Rocky's general journal entry to record this transaction will include a
A)Debit to Telephone Expense for $300
B)Credit to Accounts Payable for $300
C)Debit to Cash for $300
D)Credit to Telephone Expense for $300
E)Debit to Accounts Payable for $300

Accepted Answer

The answer of Rocky Industries received its telephone bill in...

Question 11

On April 30,Holden Company had an Accounts Receivable balance of $18,000.During the month of May,total credits to Accounts Receivable were $52,000 from customer payments.The May 31 Accounts Receivable balance was $13,000.What was the amount of credit sales during May?
A)$5,000
B)$47,000
C)$52,000
D)$57,000
E)$32,000

Accepted Answer

Normal balance = debit

Question 12

A simple account form widely used in accounting to illustrate how debits and credits work is called a:
A)Dividend account
B)Common stock account
C)Drawing account
D)T-account
E)Balance column sheet

Accepted Answer

A T-account is a simple visual representation of how debits and credits work in accounting. It consists of a vertical line with the account name on top and two horizontal lines beneath it - one for debit entries and one for credit entries. The T-shape of the account resembles the letter "T".

Question 13

Management Services,Inc.provides services to clients.On May 1,a client prepaid Management Services $60,000 for 6-months contract in advance.Management Services' general journal entry to record this transaction will include a
A)Debit to Unearned Management Fees for $60,000
B)Credit to Management Fees Earned for $60,000
C)Credit to Cash for $60,000
D)Credit to Unearned Management Fees for $60,000
E)Debit to Management Fees Earned for $60,000

Accepted Answer

The journal entry should be recorded with a credit to Unearned Management Fees for $60,000 because the client has paid in advance for services that have not yet been performed. This creates a liability for Management Services, meaning they have an obligation to provide the services paid for. The journal entry would also include a debit to Cash for $60,000 to record the receipt of payment.

Question 14

Robert Haddon contributed $70,000 in cash and some land worth $130,000 to open a new business,RH Consulting.Which of the following general journal entries will RH Consulting make to record this transaction?
A)
$$\begin{array} { | l | c | c | } 
\hline \text { Assets } & 200,000 & \
\hline \text { Comman Stack } & & 200,000 \
\hline
\end{array}$$
B)
$\begin{array}{|l|r|r|}
\hline\text { Cash and Land } & 200,000 & \
\hline \text { Common Stock } & & 200,000 \
\hline
\end{array}$

C)
$$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 70,000 & \
\hline \text { Land } & 130,000 & \
\hline \text { Common Stack } & & 200,000 \
\hline
\end{array}$$
D)
$$\begin{array} { |l | r | r | } 
\hline \text { Common Stock } & 200,000 & \
\hline \text { Cash } & & 70,000 \
\hline \text { Land } & & 130,000 \
\hline
\end{array}$$
E)
$$\begin{array} { | c | r | r | } 
\hline \text { Common Stock } & 200,000 & \
\hline \text { Assets } & & 200,000 \
\hline
\end{array}$$

Accepted Answer

The correct entry is to debit Cash for $70,000, debit Land for $130,000, and credit Common Stock for $200,000. This entry records the receipt of the cash and land from Robert Haddon and the issuance of common stock to him.

Question 15

Of the following accounts,the one that normally has a credit balance is:
A)Cash
B)Office Equipment
C)Sales Salaries Payable
D)Dividends
E)Sales Salaries Expense

Accepted Answer

Payable accounts, such as Sales Salaries Payable, normally have a credit balance. This means that the company owes money to someone else and is therefore a liability. Accounts like Cash and Office Equipment have debit balances, while accounts like Dividends and Sales Salaries Expense have a normal debit balance but can occasionally have a credit balance in certain situations.

Question 16

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:
A)Recorded as a debit to an unearned revenue account
B)Recorded as a debit to a prepaid expense account
C)Recorded as a credit to an unearned revenue account
D)Recorded as a credit to a prepaid expense account
E)Not recorded in the accounting records until the earnings process is complete

Accepted Answer

When cash is received from customers in payment for products or services that have not yet been delivered, it creates a liability for the company until the earnings process is complete. This liability is recorded as a credit to an unearned revenue account, which represents the obligation to deliver the products or services in the future. Therefore, the correct option is choice C.

Question 17

A debit is used to record:
A)A decrease in an asset account
B)A decrease in an expense account
C)An increase in a revenue account
D)An increase in the balance of common stock
E)A decrease in the balance of retained earnings

Accepted Answer

A debit decreases the balance of retained earnings, as retained earnings are part of equity, and debits decrease equity accounts.

Question 18

A credit is used to record:
A)An increase in an expense account
B)An increase in an asset account
C)An increase in an unearned revenue account
D)A decrease in a revenue account
E)A decrease to retained earnings

Accepted Answer

The answer of A credit is used to record:
A)An increase...

Question 19

Which of the following is a true statement regarding debits and credits?
A)If a company earned a profit,debits will not equal credits
B)For a business,debits are better than credits
C)A company's books are not in balance if they have a current period loss
D)Assets and expenses are both increased with a debit
E)Liabilities and equity are both increased with a debit

Accepted Answer

Assets and expenses are both increased with a debit. This is because debits are used to record increases to assets and expenses in the accounting equation (Assets = Liabilities + Equity). Therefore, option D is the correct statement. The other statements are incorrect.

Question 20

An asset created by prepayment of an expense is:
A)Recorded as a debit to an unearned revenue account
B)Recorded as a debit to a prepaid expense account
C)Recorded as a credit to an unearned revenue account
D)Recorded as a credit to a prepaid expense account
E)Not recorded in the accounting records until the earnings process is complete

Accepted Answer

An asset created by prepayment of an expense is recorded as a debit to a prepaid expense account. This is because the expense has been paid in advance, and therefore represents an asset for the company until the expense is actually incurred and can be recorded as an expense.

Quiz 2: Analyzing and Recording Transactions

Wisconsin Rentals purchased office supplies on credit.The general journal entry made by Wisconsin Rentals will include a:

On November 30,a company had an Accounts Receivable balance of $5,100.During the month of December,total credits to Accounts Receivable were $76,000 from customer payments.The December 31 Accounts Receivable balance was $43,000.What was the amount of credit sales during December?

Which of the following statements is incorrect?

On October 31,a company's Cash account had a normal balance of $7,000.During October,the account was debited for a total of $4,250 and credited for a total of $5,340.What was the balance in the Cash account at the beginning of October?

Double-entry accounting is an accounting system:

A credit entry:

On September 30,the Cash account of Value Company had a normal balance of $5,000.During September,the account was debited for a total of $12,200 and credited for a total of $11,500.What was the balance in the Cash account at the beginning of September?

Which of the following statements is correct?

An account balance is:

Rocky Industries received its telephone bill in the amount of $300 and immediately paid it.Rocky's general journal entry to record this transaction will include a

On April 30,Holden Company had an Accounts Receivable balance of $18,000.During the month of May,total credits to Accounts Receivable were $52,000 from customer payments.The May 31 Accounts Receivable balance was $13,000.What was the amount of credit sales during May?

A simple account form widely used in accounting to illustrate how debits and credits work is called a:

Management Services,Inc.provides services to clients.On May 1,a client prepaid Management Services $60,000 for 6-months contract in advance.Management Services' general journal entry to record this transaction will include a

Robert Haddon contributed $70,000 in cash and some land worth $130,000 to open a new business,RH Consulting.Which of the following general journal entries will RH Consulting make to record this transaction?

Of the following accounts,the one that normally has a credit balance is:

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

A debit is used to record:

A credit is used to record:

Which of the following is a true statement regarding debits and credits?

An asset created by prepayment of an expense is: