Question 1

Which of the following statements is true of revenue?

Accepted Answer

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

Question 2

Unearned revenue is a liability account.

Accepted Answer

A) True 
 B)False  True

Question 3

A business renders services for $26,000 and collects cash from the customer. Which of the following accounts will be debited?

Accepted Answer

A) Cash 
B) Accounts Receivable 
C) Service Revenue 
D) Bank 
A) Cash 
B) Accounts Receivable 
C) Service Revenue 
D) Bank A

Question 4

The Accounts Payable account is a(n)________ account and carries a ________ normal balance.

Accepted Answer

A) liability; debit 
B) asset; debit 
C) liability; credit 
D) asset; credit 
A) liability; debit 
B) asset; debit 
C) liability; credit 
D) asset; credit

Question 5

Which of the following is a financial statement that presents a business's accounting equation?

Accepted Answer

A) chart of accounts 
B) trial balance 
C) income statement 
D) balance sheet 
A) chart of accounts 
B) trial balance 
C) income statement 
D) balance sheet

Question 6

Which of the following accounts increases with a credit?

Accepted Answer

A) Cash 
B) Smith, Capital 
C) Accounts Receivable 
D) Prepaid Expenses 
A) Cash 
B) Smith, Capital 
C) Accounts Receivable 
D) Prepaid Expenses

Question 7

The Salaries Payable account is a(n):

Accepted Answer

A) liability account with a normal debit balance. 
B) asset account with a normal debit balance. 
C) liability account with a normal credit balance. 
D) asset account with a normal credit balance. 
A) liability account with a normal debit balance. 
B) asset account with a normal debit balance. 
C) liability account with a normal credit balance. 
D) asset account with a normal credit balance.

Question 8

For Expenses, the category of account and its normal balance is:

Accepted Answer

A) owner's equity and a credit balance. 
B) assets and a debit balance. 
C) assets and a credit balance. 
D) owner's equity and a debit balance. 
A) owner's equity and a credit balance. 
B) assets and a debit balance. 
C) assets and a credit balance. 
D) owner's equity and a debit balance.

Question 9

The balances in the accounts of liabilities and revenues are increased with a credit.

Accepted Answer

A) True 
 B)False

Question 10

A journal entry for a $75 payment for rent expense was posted as a debit to Salaries Expense and a credit to Cash. This error will cause which of the following conditions on the trial balance?

Accepted Answer

A) The sum of the credits will equal the sum of the debits. 
B) The sum of the debits will exceed the sum of the credits by $75. 
C) The sum of the debits will exceed the sum of the credits by $150. 
D) The sum of the credits will exceed the sum of the debits by $150. 
A) The sum of the credits will equal the sum of the debits. 
B) The sum of the debits will exceed the sum of the credits by $75. 
C) The sum of the debits will exceed the sum of the credits by $150. 
D) The sum of the credits will exceed the sum of the debits by $150.

Question 11

An account that normally has a debit balance may occasionally have a credit balance.

Accepted Answer

A) True 
 B)False

Question 12

When a business collects cash, the Cash account is debited.

Accepted Answer

A) True 
 B)False

Question 13

The account title used for recording the prepayment of rent for a building in the future is:

Accepted Answer

A) prepaid rent. 
B) rent payable. 
C) rent revenue. 
D) rent expense. 
A) prepaid rent. 
B) rent payable. 
C) rent revenue. 
D) rent expense.

Question 14

A business renders services to a customer for $26,000 on account. Which of the following accounts will be debited?

Accepted Answer

A) Cash 
B) Accounts Receivable 
C) Service Revenue 
D) Bank 
A) Cash 
B) Accounts Receivable 
C) Service Revenue 
D) Bank

Question 15

For the Cash account, the category of account and its normal balance is:

Accepted Answer

A) assets and a debit balance. 
B) liabilities and a credit balance. 
C) liabilities and a debit balance. 
D) assets and a credit balance. 
A) assets and a debit balance. 
B) liabilities and a credit balance. 
C) liabilities and a debit balance. 
D) assets and a credit balance.

Question 16

At the end of a month, a business shows the following balances in its ledger.   Use this data to prepare a trial balance.

Accepted Answer

The answer of At the end of a month, a...

Question 17

Liabilities are economic resources that are expected to benefit the business in the future.

Accepted Answer

A) True 
 B)False

Question 18

An asset account is increased by a debit.

Accepted Answer

A) True 
 B)False

Question 19

The following are the current month's balances for Toys Galore:   What is the net income for Toys Galore for the current month?

Accepted Answer

A) $10,000 
B) $8,250 
C) $11,750 
D) $15,000 
A) $10,000 
B) $8,250 
C) $11,750 
D) $15,000

Question 20

For Office Supplies, the category of account and its normal balance is:

Accepted Answer

A) liabilities and a debit balance. 
B) assets and a debit balance. 
C) liabilities and a credit balance. 
D) assets and a credit balance. 
A) liabilities and a debit balance. 
B) assets and a debit balance. 
C) liabilities and a credit balance. 
D) assets and a credit balance.

Exam 2: Recording Business Transactions

Which of the following statements is true of revenue?

Unearned revenue is a liability account.

A business renders services for $26,000 and collects cash from the customer. Which of the following accounts will be debited?

The Accounts Payable account is a(n)________ account and carries a ________ normal balance.

Which of the following is a financial statement that presents a business's accounting equation?

Which of the following accounts increases with a credit?

The Salaries Payable account is a(n):

For Expenses, the category of account and its normal balance is:

The balances in the accounts of liabilities and revenues are increased with a credit.

A journal entry for a $75 payment for rent expense was posted as a debit to Salaries Expense and a credit to Cash. This error will cause which of the following conditions on the trial balance?

An account that normally has a debit balance may occasionally have a credit balance.

When a business collects cash, the Cash account is debited.

The account title used for recording the prepayment of rent for a building in the future is:

A business renders services to a customer for $26,000 on account. Which of the following accounts will be debited?

For the Cash account, the category of account and its normal balance is:

At the end of a month, a business shows the following balances in its ledger. Use this data to prepare a trial balance.

Liabilities are economic resources that are expected to benefit the business in the future.

An asset account is increased by a debit.

The following are the current month's balances for Toys Galore: What is the net income for Toys Galore for the current month?

For Office Supplies, the category of account and its normal balance is:

Accounting and the Business Environment

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

The Accounts Payable account is a(n) account and carries a normal balance.