Question 1

Prepaid Rent is a(n) ________ account and has a normal ________ balance.

Accepted Answer

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

Question 2

Which of the following accounts increases with a credit?

Accepted Answer

A)  Dividends 
B)  Common Stock 
C)  Accounts Receivable 
D)  Prepaid Expense 
A)  Dividends 
B)  Common Stock 
C)  Accounts Receivable 
D)  Prepaid Expense

Question 3

Which of the following accounts increases with a debit?

Accepted Answer

A)  Prepaid Rent 
B)  Interest Payable 
C)  Accounts Payable 
D)  Common Stock 
A)  Prepaid Rent 
B)  Interest Payable 
C)  Accounts Payable 
D)  Common Stock

Question 4

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 5

Which of the following is classified as an asset account?

Accepted Answer

A)  Prepaid Insurance 
B)  Notes Payable 
C)  Dividends 
D)  Unearned Revenue 
A)  Prepaid Insurance 
B)  Notes Payable 
C)  Dividends 
D)  Unearned Revenue

Question 6

In a trial balance, total debits must always equal total credits.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following journal entries would be recorded if a business performs services and receives cash of $900 from the customer?

Accepted Answer

A)  $$\begin{array} { | c | r | r | } 
\hline \text { Service Revenue } & 900 & \
\hline \text { Cash } & & 900 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Receivable } & 900 & \
\hline \text { Service Revenue } & & 900 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 900 & \
\hline \text { Service Revenue } & & 900 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Service Revenue } & 900 & \
\hline \text { Accounts Receivable } & & 900 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | r | r | } 
\hline \text { Service Revenue } & 900 & \
\hline \text { Cash } & & 900 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Receivable } & 900 & \
\hline \text { Service Revenue } & & 900 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 900 & \
\hline \text { Service Revenue } & & 900 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Service Revenue } & 900 & \
\hline \text { Accounts Receivable } & & 900 \
\hline
\end{array}$$

Question 8

The ability of a company to pay its debts can be evaluated by using the ________.

Accepted Answer

A)  earnings per share 
B)  return on assets ratio 
C)  debt ratio 
D)  fully diluted earnings per share 
A)  earnings per share 
B)  return on assets ratio 
C)  debt ratio 
D)  fully diluted earnings per share

Question 9

A trial balance summarizes the ledger by listing all the accounts with their balances at a point in time.

Accepted Answer

A) True 
 B)False

Question 10

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 11

State whether the normal balance of each of the following accounts is a debit or credit.
 $$\begin{array} { | l | l | } 
\hline \text { Account } & \text { Normal Balance } \
\hline \text { Service Revenue } & \
\hline \text { Dividends } & \
\hline \text { Accounts Payable } & \
\hline \text { Prepaid Insurance } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Question 12

Which of the following sequences states the order in which accounts are listed on a trial balance?

Accepted Answer

A)  Equity → Assets → Liabilities 
B)  Liabilities → Assets → Equity 
C)  Assets → Equity → Liabilities 
D)  Assets → Liabilities → Equity 
A)  Equity → Assets → Liabilities 
B)  Liabilities → Assets → Equity 
C)  Assets → Equity → Liabilities 
D)  Assets → Liabilities → Equity

Question 13

A business makes a cash payment to a supplier for office supplies that were purchased earlier on account. Which of the following accounts is debited?

Accepted Answer

A)  Cash 
B)  Accounts Payable 
C)  Office Supplies 
D)  Office Supplies Expense 
A)  Cash 
B)  Accounts Payable 
C)  Office Supplies 
D)  Office Supplies Expense

Question 14

Common Stock is a separate account in the ________ category of the accounting equation.

Accepted Answer

A)  equity 
B)  asset 
C)  liability 
D)  revenue 
A)  equity 
B)  asset 
C)  liability 
D)  revenue

Question 15

The T-account is a summary device that is shaped like a capital T with debits posted on the left side of the vertical line and credits posted on the right side of the vertical line.

Accepted Answer

A) True 
 B)False

Question 16

A business purchases equipment for $8,000 cash. Which of the following accounts is debited?

Accepted Answer

A)  Cash 
B)  Accounts Payable 
C)  Common Stock 
D)  Equipment 
A)  Cash 
B)  Accounts Payable 
C)  Common Stock 
D)  Equipment

Question 17

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 18

A business prepays four months' office rent. Which of the following accounts is debited?

Accepted Answer

A)  Rent Expense 
B)  Cash 
C)  Prepaid Rent 
D)  Unearned Rent 
A)  Rent Expense 
B)  Cash 
C)  Prepaid Rent 
D)  Unearned Rent

Question 19

A note receivable represents an oral promise that a customer will pay a fixed amount of money and interest by a certain date in the future.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

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

Exam 2: Recording Business Transactions

Prepaid Rent is a(n) ________ account and has a normal ________ balance.

Which of the following accounts increases with a credit?

Which of the following accounts increases with a debit?

Which of the following is an asset account?

Which of the following is classified as an asset account?

In a trial balance, total debits must always equal total credits.

Which of the following journal entries would be recorded if a business performs services and receives cash of $900 from the customer?

The ability of a company to pay its debts can be evaluated by using the ________.

A trial balance summarizes the ledger by listing all the accounts with their balances at a point in time.

Posting a transaction means ________.

State whether the normal balance of each of the following accounts is a debit or credit. Account Normal Balance Service Revenue Dividends Accounts Payable Prepaid Insurance

Which of the following sequences states the order in which accounts are listed on a trial balance?

A business makes a cash payment to a supplier for office supplies that were purchased earlier on account. Which of the following accounts is debited?

Common Stock is a separate account in the ________ category of the accounting equation.

The T-account is a summary device that is shaped like a capital T with debits posted on the left side of the vertical line and credits posted on the right side of the vertical line.

A business purchases equipment for $8,000 cash. Which of the following accounts is debited?

The Salaries Payable account is a(n) ________.

A business prepays four months' office rent. Which of the following accounts is debited?

A note receivable represents an oral promise that a customer will pay a fixed amount of money and interest by a certain date in the future.

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

Accounting and the Business Environment

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based Just-In-Time

Cost Volume Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Understanding Accounting Information Systems and their Components

Filters

Prepaid Rent is a(n) account and has a normal balance.