Exam 2: Recording Business Transactions

Assets include cash, land, and accounts payable.

A credit always decreases an asset account.

The purchase of office equipment for cash would include a:

When a business sells inventory in exchange for cash, which of the following accounts is credited?

The purchase of office supplies for cash would include a debit to the asset Office Supplies and a credit to the asset Cash.

The collection of cash from a customer on account would:

The journal entry to record the payment of cash dividends to shareholders would include a:

The normal balance of the Common Shares account is a because it increases .

When a company purchases inventory on account (that is, on credit), which type of account is credited to record the transaction?

Which of the following statements regarding a trial balance is false?

Which type of account is credited when a company records a debt?

An accounts receivable represents the promise of the business to pay a debt.

This summarizes all the account balances for the financial statements and shows whether total debits equals total credits:

Total debits must always equal total credits in order for a trial balance to balance.

Purchasing a three-year insurance policy for cash would include a:

The accounting transaction to record payment of the heating bill would include a:

Credits to revenue accounts ultimately result in:

The trial balance is the starting point for preparing the organization's financial statements.

A trial balance is:

An expense account is known as a contra equity account.