Question 1

Which of the following statements is true?

Accepted Answer

Expense accounts are increased with debits and have normal debit balances. Expenses are considered as losses for the business and are therefore considered as debits in the accounting equation. Debiting expenses increases them, while crediting them decreases the expense account.

Question 2

When Accounts Payable is credited, it indicates

Accepted Answer

The answer of When Accounts Payable is credited, it indicates
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Question 3

The owner's drawings account

Accepted Answer

The owner's drawings account is a subdivision of owner's equity and it is increased with debits and decreased with credits. It does not appear on the income statement as it is a transaction between the owner and the business and does not affect the revenue or expenses of the business. While it is important to record transactions in the owner's drawings account, it does not necessarily have to show transactions in every accounting period.

Question 4

The owner's drawings account

Accepted Answer

The owner's drawings account is a contra equity account that is used to track the withdrawals made by the owner from the business. When the owner withdraws cash, the drawings account is debited and the cash account is credited to reflect the reduction in the owner's equity. Therefore, the correct answer is C. A is incorrect because the owner's drawings account is not reported on the income statement. B is incorrect because the owner's drawings account is not credited when the owner withdraws cash. D is incorrect because the owner's drawings account is a proper subdivision of owner's equity.

Question 5

Which of the following statements about expenses is not true?

Accepted Answer

Expenses have no relation to owner's drawings. Owner's drawings refer to the money taken out by the owner for personal use and are not related to expenses.

Question 6

A credit to a liability account

Accepted Answer

A credit to a liability account indicates an increase in the amount owed to creditors. This is because credits are used to record increases in liability accounts.

Question 7

On May 1, 2020, Anzola Company. reported a cash balance of $6,000. During May, Anzola deposited $12,000. Total disbursements were $7,000. The cash balance at the end of May is a

Accepted Answer

The cash balance at the end of May is calculated by adding the deposits to the initial balance and then subtracting the disbursements: $6,000 + $12,000 - $7,000 = $11,000. Since this is a positive balance, it is a debit balance.

Question 8

When Accounts Payable account is debited, it indicates

Accepted Answer

Debiting the Accounts Payable account decreases the liability, indicating a reduction in the amount owed to creditors.

Question 9

At July 1, Blue Ridge Industries reported owner's capital of $70,000. During July, Blue Ridge had a net loss of $5,000. Owner drawings totalled $5,000. At July 31, Blue Ridge's owner's capital is

Accepted Answer

Owner's capital = Beginning owner's capital + Net income/loss - Owner drawings= $70,000 - $5,000 - $5,000= $60,000

Question 10

In the first month of operations, the total of the debit entries to Delaney Company's cash account amounted to $2,100 and the total of the credit entries to the company's cash account amounted to $1,400. The balance of the cash account at the end of the month is a

Accepted Answer

To find the balance of the cash account at the end of the month, we need to subtract the total credits from the total debits:

$2,100 - $1,400 = $700

Since the total debits exceed the total credits, the account has a debit balance of $700.

Question 11

In the first month of operations, the total of the debit entries to the cash account amounted to $1,400 and the total of the credit entries to the cash account amounted to $800. The cash account has a(n)

Accepted Answer

The cash account has a balance of $600 debit ($1,400 debit entries - $800 credit entries = $600). Therefore, option C is correct. Option A and D are incorrect because they suggest that the cash account has a credit balance, which is not the case. Option B is also incorrect because it suggests that the cash account has a larger debit balance than the actual balance.

Question 12

In the first month of operations for Pendleton Industries, the total of the debit entries to the cash account amounted to $33,000 ($13,000 investment by the owner and revenues of $20,000). The total of the credit entries to the cash account amounted to $21,000 (purchase of equipment $8,000 and payment of expenses $13,000). At the end of the month, the cash account has a(n)

Accepted Answer

The cash account has a $12,000 debit balance, calculated by subtracting the total credits ($21,000) from the total debits ($33,000).

Question 13

When a liability account is credited, it indicates

Accepted Answer

Crediting a liability account increases the amount owed to creditors, as liabilities represent obligations to pay.

Question 14

In the first month of operations, the total of the debit entries to Three Sisters Company's cash account amounted to $1,000. The credit entries to the cash account totaled $300. At the end of the month, the cash account has a(n)

Accepted Answer

Total debit entries are $1,000 and total credit entries are $300. Therefore, the cash account has a debit balance of $700 ($1,000 - $300).

Question 15

On June 1, 2020, Barcelona Inc. reported a cash balance of $11,000. During June, Barcelona made deposits of $3,000 and made disbursements totalling $9,000. What is the cash balance at the end of June?

Accepted Answer

The cash balance at the end of June is calculated as the beginning balance plus deposits minus disbursements: $11,000 + $3,000 - $9,000 = $5,000. A debit balance indicates a positive cash balance.

Question 16

At January 1, 2020, Croc Industries reported owner's capital of $140,000. During 2020, Croc had a net loss of $30,000 and owner drawings of $15,000. At December 31, 2020, the amount of owner's capital is

Accepted Answer

Owner's capital at December 31, 2020 = Owner's capital at January 1, 2020 - Net loss for 2020 - Owner drawings for 2020= $140,000 - $30,000 - $15,000= $95,000

Question 17

When Accounts Receivable is credited, it indicates

Accepted Answer

When Accounts Receivable is credited, it means that customers have paid their debts, hence there is a decrease in the amount owed by customers.

Question 18

Which of the following statements is not true?

Accepted Answer

Expenses decrease owner's equity, not increase it.

Question 19

Owner's Drawings is

Accepted Answer

Owner's Drawings is increased for owner withdrawals because it represents the amount of money or assets taken out of the business by the owner for personal use.

Question 20

When an owner makes a withdrawal,

Accepted Answer

When an owner makes a withdrawal, it could be in the form of cash or another asset, so option A is correct.

Quiz 3: The Recording Process: Debits and Credits

Which of the following statements is true?

When Accounts Payable is credited, it indicates

The owner's drawings account

The owner's drawings account

Which of the following statements about expenses is not true?

A credit to a liability account

On May 1, 2020, Anzola Company. reported a cash balance of $6,000. During May, Anzola deposited $12,000. Total disbursements were $7,000. The cash balance at the end of May is a

When Accounts Payable account is debited, it indicates

At July 1, Blue Ridge Industries reported owner's capital of $70,000. During July, Blue Ridge had a net loss of $5,000. Owner drawings totalled $5,000. At July 31, Blue Ridge's owner's capital is

In the first month of operations, the total of the debit entries to Delaney Company's cash account amounted to $2,100 and the total of the credit entries to the company's cash account amounted to $1,400. The balance of the cash account at the end of the month is a

In the first month of operations, the total of the debit entries to the cash account amounted to $1,400 and the total of the credit entries to the cash account amounted to $800. The cash account has a(n)

When a liability account is credited, it indicates

In the first month of operations, the total of the debit entries to Three Sisters Company's cash account amounted to $1,000. The credit entries to the cash account totaled $300. At the end of the month, the cash account has a(n)

On June 1, 2020, Barcelona Inc. reported a cash balance of $11,000. During June, Barcelona made deposits of $3,000 and made disbursements totalling $9,000. What is the cash balance at the end of June?

At January 1, 2020, Croc Industries reported owner's capital of $140,000. During 2020, Croc had a net loss of $30,000 and owner drawings of $15,000. At December 31, 2020, the amount of owner's capital is

When Accounts Receivable is credited, it indicates

Which of the following statements is not true?

Owner's Drawings is

When an owner makes a withdrawal,