Exam 2: Recording Business Transactions

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

Which of the following accounts does not have a normal credit balance?

Receiving a payment from a customer on account would:

The purchase of a building with a down payment of cash and the signing of a note payable for the remainder would include a debit to both the asset Building,and a credit to the asset Cash and the liability Note Payable.

Every transaction affects at least two accounts.

The entry to record an owner investment of $500 into the business would be:

The normal balance of the Supplies account is a ________ because it is a(n)________ account.

The normal balance of the Dividends account is a ________ because it decreases ________.

Performing a service on account would include a:

The trial balance is used to prepare the income statement.

A trial balance is simply a list of all accounts and their balances at a point in time.

Describe what is listed on a trial balance.

The payment for rent of the office building for one month would include a:

The normal balance of Accounts Receivable is a ________ because it is a(n)________ account.

Posting,a part of the accounting process,refers to:

Use T-accounts to show the resulting balance in each account.

The retained earnings account represents the money invested by shareholders into the business since its inception.

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

All shareholders equity accounts typically have a credit balance except for dividends which are a debit.

A dividend account is known as a contra equity account.