Question 1

Data from a trial balance is used to prepare the three basic financial statements.

Accepted Answer

A) True 
 B)False

Question 2

A utility bill is received for expenses incurred. It will be paid in the following accounting period. Which of the following would be TRUE as a result of the receipt of the utility bill?

Accepted Answer

A) Net income will increase. 
B) Owner's equity will decrease. 
C) Total liabilities will decrease. 
D) There will be no effect on total liabilities. 
A) Net income will increase. 
B) Owner's equity will decrease. 
C) Total liabilities will decrease. 
D) There will be no effect on total liabilities.

Question 3

A business pays $500 cash for supplies. Which account is debited?

Accepted Answer

A) Cash 
B) Accounts payable 
C) Supplies 
D) Service revenue 
A) Cash 
B) Accounts payable 
C) Supplies 
D) Service revenue

Question 4

When recording a transaction in a journal, the credit side is entered first, followed by the debit side.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following journal entries would be recorded if a business purchased $200 of supplies on account?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 6

A business purchases equipment by paying cash of $8,000 and issuing a note payable of $12,000. Which of the following occurs?

Accepted Answer

A) Cash is credited for $8,000; Equipment is credited for $20,000; and Notes payable is debited for $12,000. 
B) Cash is credited for $8,000; Equipment is debited for $20,000; and Notes payable is credited for $12,000. 
C) Cash is debited for $8,000; Equipment is debited for $12,000; and Notes payable is credited for $20,000. 
D) Cash is credited for $8,000; Equipment is credited for $12,000; and Notes payable is debited for $4,000. 
A) Cash is credited for $8,000; Equipment is credited for $20,000; and Notes payable is debited for $12,000. 
B) Cash is credited for $8,000; Equipment is debited for $20,000; and Notes payable is credited for $12,000. 
C) Cash is debited for $8,000; Equipment is debited for $12,000; and Notes payable is credited for $20,000. 
D) Cash is credited for $8,000; Equipment is credited for $12,000; and Notes payable is debited for $4,000.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

A business borrows cash by signing a note payable. Which account is credited?

Accepted Answer

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

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

A business makes a cash payment for advertising expense. Which account is debited?

Accepted Answer

A) Cash 
B) Service revenue 
C) Accounts receivable 
D) Advertising expense 
A) Cash 
B) Service revenue 
C) Accounts receivable 
D) Advertising expense

Question 12

A business renders services for $16,000 and collects cash from the customer. Which account is debited?

Accepted Answer

A) Cash 
B) Accounts receivable 
C) Service revenue 
D) Accounts payable 
A) Cash 
B) Accounts receivable 
C) Service revenue 
D) Accounts payable

Question 13

Expenses are increases in owner's equity caused by providing goods or services for customers.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

For assets and expenses, a debit increases the account.

Accepted Answer

A) True 
 B)False

Question 16

A business makes a payment of $1,200 on a note payable, consisting of a $200 interest payment and a $1,000 principal payment. Which of the following journal entries would be recorded?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 17

A journal is a chronological record of transactions.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following journal entries would be recorded if a business renders service and receives cash of $400 from the customer?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 19

Which of the following statements CORRECTLY describes a trial balance?

Accepted Answer

A) A trial balance is the first step in the accounting cycle. 
B) A trial balance is also known as a balance sheet. 
C) A trial balance is a list of all accounts with their balances. 
D) A trial balance is also known as the chart of accounts. 
A) A trial balance is the first step in the accounting cycle. 
B) A trial balance is also known as a balance sheet. 
C) A trial balance is a list of all accounts with their balances. 
D) A trial balance is also known as the chart of accounts.

Question 20

A business owner took a withdrawal. Which of the following would be TRUE?

Accepted Answer

A) Net income would decrease. 
B) Total assets would increase. 
C) There would be no effect on total assets. 
D) Owner's equity would decrease. 
A) Net income would decrease. 
B) Total assets would increase. 
C) There would be no effect on total assets. 
D) Owner's equity would decrease.

Exam 2: Recording Business Transactions

Data from a trial balance is used to prepare the three basic financial statements.

A utility bill is received for expenses incurred. It will be paid in the following accounting period. Which of the following would be TRUE as a result of the receipt of the utility bill?

A business pays $500 cash for supplies. Which account is debited?

When recording a transaction in a journal, the credit side is entered first, followed by the debit side.

Which of the following journal entries would be recorded if a business purchased $200 of supplies on account?

A business purchases equipment by paying cash of $8,000 and issuing a note payable of $12,000. Which of the following occurs?

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

A business borrows cash by signing a note payable. Which account is credited?

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

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

A business makes a cash payment for advertising expense. Which account is debited?

A business renders services for $16,000 and collects cash from the customer. Which account is debited?

Expenses are increases in owner's equity caused by providing goods or services for customers.

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

For assets and expenses, a debit increases the account.

A business makes a payment of $1,200 on a note payable, consisting of a $200 interest payment and a $1,000 principal payment. Which of the following journal entries would be recorded?

A journal is a chronological record of transactions.

Which of the following journal entries would be recorded if a business renders service and receives cash of $400 from the customer?

Which of the following statements CORRECTLY describes a trial balance?

A business owner took a withdrawal. Which of the following would be TRUE?

Accounting and the Business Environment

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, Bonds Payable, and Classification of Liabilities on the Balance Sheet

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

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