Question 1

A debit always means a decrease and a credit means increase.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

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

Question 3

Nuptial Inc. paid the rent for the current month in cash. Which of the following account titles will be debited?

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 4

The following transactions have been journalized and posted to the proper accounts. Prepare a trial balance using the following details:
a. Edward Wilson invested $15,000 cash in his new landscaping business.
b. Paid the first month's rent with $800 cash.
c. Purchased equipment by paying $4,000 cash and executing a note payable for $4,000.
d. Purchased office supplies for $200 cash.
e. Billed clients for a total of $7,000 for design services rendered.
f. Received $1,000 cash from clients for services rendered above.

Accepted Answer

None

Question 5

Which of the following is a liability account?

Accepted Answer

A)  Accounts Payable 
B)  Prepaid Expense 
C)  Salaries Expense 
D)  Service Revenue 
A)  Accounts Payable 
B)  Prepaid Expense 
C)  Salaries Expense 
D)  Service Revenue

Question 6

The system of accounting in which every transaction affects at least two accounts is called the double-entry system.

Accepted Answer

A) True 
 B)False

Question 7

A business borrows cash by signing a note payable. Which of the following accounts will be debited?

Accepted Answer

A)  Notes Payable 
B)  Accounts Payable 
C)  Bank 
D)  Cash 
A)  Notes Payable 
B)  Accounts Payable 
C)  Bank 
D)  Cash

Question 8

Mitchell Florists had the following total assets, liabilities, and equity as of December 31. $$\begin{array} { | l | r | } 
\hline \text { Assets } & \$ 450,000 \
\hline \text { Liabilities } & 135,000 \
\hline \text { Equity } & 315,000 \
\hline
\end{array}$$ What is Mitchell's debt ratio as of December 31?

Accepted Answer

A)  30% 
B)  70% 
C)  100% 
D)  43% 
A)  30% 
B)  70% 
C)  100% 
D)  43%

Question 9

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 10

The first step in the journalizing and posting process is to:

Accepted Answer

A)  post the accounts to the ledger. 
B)  identify each account involved and its type. 
C)  determine whether each account is increased or decreased. 
D)  record the transaction in the journal, including a brief explanation. 
A)  post the accounts to the ledger. 
B)  identify each account involved and its type. 
C)  determine whether each account is increased or decreased. 
D)  record the transaction in the journal, including a brief explanation.

Question 11

Which of the following is an asset account?

Accepted Answer

A)  Wages Payable 
B)  Notes Payable 
C)  Unearned Revenue 
D)  Accounts Receivable 
A)  Wages Payable 
B)  Notes Payable 
C)  Unearned Revenue 
D)  Accounts Receivable

Question 12

A business purchases equipment for $8,000 cash. Which of the following accounts will be credited?

Accepted Answer

A)  Cash 
B)  Accounts Payable 
C)  Sandra, Capital 
D)  Equipment 
A)  Cash 
B)  Accounts Payable 
C)  Sandra, Capital 
D)  Equipment

Question 13

Debits in the journal are always posted as debits in the ledger.

Accepted Answer

A) True 
 B)False

Question 14

The higher the debt ratio, the lower the risk.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is used by both internal and external users to the company?

Accepted Answer

A)  chart of accounts 
B)  trial balance 
C)  balance sheet 
D)  costing reports 
A)  chart of accounts 
B)  trial balance 
C)  balance sheet 
D)  costing reports

Question 16

Which of the following groups of accounts normally have a debit balance?

Accepted Answer

A)  assets and expenses 
B)  revenues and expenses 
C)  liabilities and owner's equity 
D)  assets and liabilities 
A)  assets and expenses 
B)  revenues and expenses 
C)  liabilities and owner's equity 
D)  assets and liabilities

Question 17

A business purchases equipment by paying $8,000 in cash 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 debited 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 debited for $8,000; Equipment is credited for $12,000; and Notes Payable is debited for $4,000.

Question 18

Posting a transaction means:

Accepted Answer

A)  calculating the balance in an account. 
B)  transferring data from the journal to the ledger 
C)  preparing a summary of account balances. 
D)  finding the account number in the chart of accounts. 
A)  calculating the balance in an account. 
B)  transferring data from the journal to the ledger 
C)  preparing a summary of account balances. 
D)  finding the account number in the chart of accounts.

Question 19

Mitchell Florists reported assets of $1,000 and equity of $350. What is Mitchell's debt ratio?

Accepted Answer

A)  65% 
B)  35% 
C)  100% 
D)  70% 
A)  65% 
B)  35% 
C)  100% 
D)  70%

Question 20

A business buys $500 of Office Supplies on account. Which of the following accounts is credited?

Accepted Answer

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

Exam 2: Recording Business Transactions

A debit always means a decrease and a credit means increase.

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

Nuptial Inc. paid the rent for the current month in cash. Which of the following account titles will be debited?

Which of the following is a liability account?

The system of accounting in which every transaction affects at least two accounts is called the double-entry system.

A business borrows cash by signing a note payable. Which of the following accounts will be debited?

Mitchell Florists had the following total assets, liabilities, and equity as of December 31. Assets \ 450,000 Liabilities 135,000 Equity 315,000 What is Mitchell's debt ratio as of December 31?

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

The first step in the journalizing and posting process is to:

Which of the following is an asset account?

A business purchases equipment for $8,000 cash. Which of the following accounts will be credited?

Debits in the journal are always posted as debits in the ledger.

The higher the debt ratio, the lower the risk.

Which of the following is used by both internal and external users to the company?

Which of the following groups of accounts normally have a debit balance?

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

Posting a transaction means:

Mitchell Florists reported assets of $1,000 and equity of $350. What is Mitchell's debt ratio?

A business buys $500 of Office Supplies on account. Which of the following accounts is credited?

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

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