Question 1

When a business records an expense incurred, the expense account is always credited.

Accepted Answer

A) True 
 B)False  False

Question 2

An owner invests $20 000 in her new business by depositing the cash in the business bank account. Which account is debited?

Accepted Answer

A) Capital 
B) Accounts payable 
C) Accounts receivable 
D) Cash 
A) Capital 
B) Accounts payable 
C) Accounts receivable 
D) Cash D

Question 3

Which of the following is the detailed record of the changes in a particular asset, liability, or owners' equity?

Accepted Answer

A) Ledger 
B) Account 
C) Trial balance 
D) Journal 
A) Ledger 
B) Account 
C) Trial balance 
D) Journal B

Question 4

When a business makes a cash payment, the cash account is always debited.

Accepted Answer

A) True 
 B)False

Question 5

Equipment is purchased for cash. Which of the following would be TRUE?

Accepted Answer

A) There is an increase in total assets and a decrease in total liabilities. 
B) There is no effect on total assets. 
C) There is an increase in total assets. 
D) There is a decrease in both total assets and total liabilities. 
A) There is an increase in total assets and a decrease in total liabilities. 
B) There is no effect on total assets. 
C) There is an increase in total assets. 
D) There is a decrease in both total assets and total liabilities.

Question 6

In the standard accounting system, we use double entry accounting, which means we record the dual effects of each transaction.

Accepted Answer

A) True 
 B)False

Question 7

A trial balance lists accounts in which order?

Accepted Answer

A) Assets, Liabilities, Owners' equity, Revenues, Expenses 
B) Assets, Expenses, Liabilities, Revenues, Owners' equity 
C) Assets, Revenues, Liabilities, Expenses, Owners' equity 
D) Assets, Liabilities, Revenues, Expenses, Owners' equity 
A) Assets, Liabilities, Owners' equity, Revenues, Expenses 
B) Assets, Expenses, Liabilities, Revenues, Owners' equity 
C) Assets, Revenues, Liabilities, Expenses, Owners' equity 
D) Assets, Liabilities, Revenues, Expenses, Owners' equity

Question 8

The owner's equity account is increased by a debit.

Accepted Answer

A) True 
 B)False

Question 9

A business purchases equipment for cash in the amount of $8 000. Which account is debited?

Accepted Answer

A) Equipment 
B) Supplies expense 
C) Cash 
D) Accounts payable 
A) Equipment 
B) Supplies expense 
C) Cash 
D) Accounts payable

Question 10

Debit refers to the right side of the T- account, and credit refers to the left side.

Accepted Answer

A) True 
 B)False

Question 11

When a business records revenue earned, the revenue account is always credited.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following accounts is a liability?

Accepted Answer

A) Service revenue 
B) Accounts payable 
C) Prepaid expenses 
D) Salary expense 
A) Service revenue 
B) Accounts payable 
C) Prepaid expenses 
D) Salary expense

Question 13

Which of the following is the last step of journalising an entry?

Accepted Answer

A) Record the transaction in the journal, including a brief explanation. 
B) Identify each account affected and its type. 
C) Determine whether each account has increased or decreased. 
D) Post the accounts to the ledger. 
A) Record the transaction in the journal, including a brief explanation. 
B) Identify each account affected and its type. 
C) Determine whether each account has increased or decreased. 
D) Post the accounts to the ledger.

Question 14

A business purchases equipment for cash in the amount of $8 000. Which account is credited?

Accepted Answer

A) Cash 
B) Equipment 
C) Supplies expense 
D) Accounts payable 
A) Cash 
B) Equipment 
C) Supplies expense 
D) Accounts payable

Question 15

Which of the following is NOT part of owners' equity?

Accepted Answer

A) Bills payable 
B) Capital 
C) Accounts receivable 
D) Both A and C 
A) Bills payable 
B) Capital 
C) Accounts receivable 
D) Both A and C

Question 16

The accounting process of copying a transaction from the journal to the ledger is called:

Accepted Answer

A) posting. 
B) footing. 
C) proofing. 
D) journalising. 
A) posting. 
B) footing. 
C) proofing. 
D) journalising.

Question 17

A listing of all account titles in numerical order is a(n):

Accepted Answer

A) chart of accounts. 
B) journal. 
C) ledger. 
D) income statement. 
A) chart of accounts. 
B) journal. 
C) ledger. 
D) income statement.

Question 18

Which of the following statements about revenue is CORRECT?

Accepted Answer

A) Revenues increase owners' equity, so a revenue account's normal balance is a debit balance. 
B) Revenues decrease owners' equity, so a revenue account's normal balance is a credit balance. 
C) Revenues increase owners' equity, so a revenue account's normal balance is a credit balance. 
D) Revenues decrease owners' equity, so a revenue account's normal balance is a debit balance. 
A) Revenues increase owners' equity, so a revenue account's normal balance is a debit balance. 
B) Revenues decrease owners' equity, so a revenue account's normal balance is a credit balance. 
C) Revenues increase owners' equity, so a revenue account's normal balance is a credit balance. 
D) Revenues decrease owners' equity, so a revenue account's normal balance is a debit balance.

Question 19

Which of the following are accrued liabilities?

Accepted Answer

A) Salary payable 
B) Interest payable 
C) Taxes payable 
D) All of the above 
A) Salary payable 
B) Interest payable 
C) Taxes payable 
D) All of the above

Question 20

A trial balance summarises a ledger by listing all the accounts with their ending balances.

Accepted Answer

A) True 
 B)False

Exam 2: Recording Business Transactions

When a business records an expense incurred, the expense account is always credited.

An owner invests $20 000 in her new business by depositing the cash in the business bank account. Which account is debited?

Which of the following is the detailed record of the changes in a particular asset, liability, or owners' equity?

When a business makes a cash payment, the cash account is always debited.

Equipment is purchased for cash. Which of the following would be TRUE?

In the standard accounting system, we use double entry accounting, which means we record the dual effects of each transaction.

A trial balance lists accounts in which order?

The owner's equity account is increased by a debit.

A business purchases equipment for cash in the amount of $8 000. Which account is debited?

Debit refers to the right side of the T- account, and credit refers to the left side.

When a business records revenue earned, the revenue account is always credited.

Which of the following accounts is a liability?

Which of the following is the last step of journalising an entry?

A business purchases equipment for cash in the amount of $8 000. Which account is credited?

Which of the following is NOT part of owners' equity?

The accounting process of copying a transaction from the journal to the ledger is called:

A listing of all account titles in numerical order is a(n):

Which of the following statements about revenue is CORRECT?

Which of the following are accrued liabilities?

A trial balance summarises a ledger by listing all the accounts with their ending balances.

The Role of Accounting in Business

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, Plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Share Capital and the Balance Sheet

Companies: Effects on Retained Earnings, Share Splits and Buy-Backs, and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Introduction to Managerial Accounting and the Master Budget

Job Costing

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

Appendix

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