Question 1

A trial balance:

Accepted Answer

A)  cannot be corrected if it contains errors. 
B)  proves that all transactions have been recorded properly. 
C)  proves that total debits equal total credits. 
D)  should be prepared at the end of each business day. 
A)  cannot be corrected if it contains errors. 
B)  proves that all transactions have been recorded properly. 
C)  proves that total debits equal total credits. 
D)  should be prepared at the end of each business day.

Question 2

When preparing a journal entry, debits are always listed before credits.

Accepted Answer

A) True 
 B)False

Question 3

If a company declares and pays a dividend to its stockholders, both cash and expenses will decrease.

Accepted Answer

A) True 
 B)False

Question 4

The journal is also known as the book of original entry.

Accepted Answer

A) True 
 B)False

Question 5

When a company pays an amount it owes a creditor:

Accepted Answer

A)  assets are decreased and net income is decreased. 
B)  assets are decreased and liabilities are increased. 
C)  liabilities are decreased and net income is increased. 
D)  assets are decreased and liabilities are decreased. 
A)  assets are decreased and net income is decreased. 
B)  assets are decreased and liabilities are increased. 
C)  liabilities are decreased and net income is increased. 
D)  assets are decreased and liabilities are decreased.

Question 6

A company sold land for the same price that they paid for it last year. When entering this transaction in the journal, there will be a:

Accepted Answer

A)  credit to Land. 
B)  debit to Land. 
C)  debit to Accounts Payable. 
D)  credit to Accounts Receivable. 
A)  credit to Land. 
B)  debit to Land. 
C)  debit to Accounts Payable. 
D)  credit to Accounts Receivable.

Question 7

Information is taken from the ledger and the posted to the journal.

Accepted Answer

A) True 
 B)False

Question 8

When journalizing and posting transactions in the books:

Accepted Answer

A)  the rules of debit and credit are followed to increase or decrease each account. 
B)  the credit side of the transaction is entered on the left margin. 
C)  it is not necessary to use both the journal and the ledger. 
D)  debits in the journal can be posted as credits in the ledger. 
A)  the rules of debit and credit are followed to increase or decrease each account. 
B)  the credit side of the transaction is entered on the left margin. 
C)  it is not necessary to use both the journal and the ledger. 
D)  debits in the journal can be posted as credits in the ledger.

Question 9

A trial balance has total debits of $720,000 and total credits of $850,000, with a debit balance of $65,000 for notes payable. This situation indicates:

Accepted Answer

A)  a slide. 
B)  an incorrect posting. 
C)  a transposition. 
D)  that none of the above are correct. 
A)  a slide. 
B)  an incorrect posting. 
C)  a transposition. 
D)  that none of the above are correct.

Question 10

The Accounts Receivable account for Rusty's Mechanic Shop had a beginning balance of $12,000. During the month, Rusty received payments of $7,000 on account and made sales on account of $16,000. The ending balance in the Accounts Receivable account is:

Accepted Answer

A)  $3,000. 
B)  $9,000. 
C)  $21,000. 
D)  $35,000. 
A)  $3,000. 
B)  $9,000. 
C)  $21,000. 
D)  $35,000.

Question 11

The rules for recording accounting transactions include all of the following EXCEPT:

Accepted Answer

A)  Every transaction's net amount on the left side of the equation must equal the net amount on the right side of the equation. 
B)  Total assets must always equal total liabilities plus total equity. 
C)  Every transaction affects the financial statements of the business. 
D)  Both sides of the accounting equation must be affected. 
A)  Every transaction's net amount on the left side of the equation must equal the net amount on the right side of the equation. 
B)  Total assets must always equal total liabilities plus total equity. 
C)  Every transaction affects the financial statements of the business. 
D)  Both sides of the accounting equation must be affected.

Question 12

An owner makes an investment of cash into the business. This transaction would include a:

Accepted Answer

A)  debit to Common Stock and a credit to Common Stock. 
B)  debit to Cash and a credit to Common Stock. 
C)  debit to Retained Earnings and a credit to Cash. 
D)  debit to Common Stock and a credit to Retained Earnings. 
A)  debit to Common Stock and a credit to Common Stock. 
B)  debit to Cash and a credit to Common Stock. 
C)  debit to Retained Earnings and a credit to Cash. 
D)  debit to Common Stock and a credit to Retained Earnings.

Question 13

The purchase of office computers for cash would include a debit to:

Accepted Answer

A)  Cash and a credit to Office Equipment. 
B)  Office Equipment and a credit to Accounts Payable. 
C)  Accounts Receivable and credit to Office Equipment. 
D)  Office Equipment and a credit to Cash. 
A)  Cash and a credit to Office Equipment. 
B)  Office Equipment and a credit to Accounts Payable. 
C)  Accounts Receivable and credit to Office Equipment. 
D)  Office Equipment and a credit to Cash.

Question 14

When a trial balance is out of balance due to a transposition error, the difference between total debits and total credits will be evenly divisible by 2.

Accepted Answer

A) True 
 B)False

Question 15

A transaction is any event that has a financial impact on the business that can be
measured reliably.

Accepted Answer

A) True 
 B)False

Question 16

Accounts are listed in random order in a trial balance.

Accepted Answer

A) True 
 B)False

Question 17

The balance of an account can be determined by adding all of the debits, adding all of the credits, and then subtracting the two amounts.

Accepted Answer

A) True 
 B)False

Question 18

All stockholders' equity accounts are increased by debits.

Accepted Answer

A) True 
 B)False

Question 19

When a company incurs additional debt, which type of account is increased?

Accepted Answer

A)  Expense account 
B)  Retained earnings 
C)  Liability account 
D)  Common Stock account 
A)  Expense account 
B)  Retained earnings 
C)  Liability account 
D)  Common Stock account

Question 20

When setting up the numbering system for a company's chart of accounts:

Accepted Answer

A)  the account numbers generally have four or more digits. 
B)  asset accounts will begin with the number 5. 
C)  revenue accounts will begin with the number 4. 
D)  there cannot be a gap between account numbers. 
A)  the account numbers generally have four or more digits. 
B)  asset accounts will begin with the number 5. 
C)  revenue accounts will begin with the number 4. 
D)  there cannot be a gap between account numbers.

A trial balance:

When preparing a journal entry, debits are always listed before credits.

If a company declares and pays a dividend to its stockholders, both cash and expenses will decrease.

The journal is also known as the book of original entry.

When a company pays an amount it owes a creditor:

A company sold land for the same price that they paid for it last year. When entering this transaction in the journal, there will be a:

Information is taken from the ledger and the posted to the journal.

When journalizing and posting transactions in the books:

A trial balance has total debits of $720,000 and total credits of $850,000, with a debit balance of $65,000 for notes payable. This situation indicates:

The Accounts Receivable account for Rusty's Mechanic Shop had a beginning balance of $12,000. During the month, Rusty received payments of $7,000 on account and made sales on account of $16,000. The ending balance in the Accounts Receivable account is:

The rules for recording accounting transactions include all of the following EXCEPT:

An owner makes an investment of cash into the business. This transaction would include a:

The purchase of office computers for cash would include a debit to:

When a trial balance is out of balance due to a transposition error, the difference between total debits and total credits will be evenly divisible by 2.

A transaction is any event that has a financial impact on the business that can be measured reliably.

Accounts are listed in random order in a trial balance.

The balance of an account can be determined by adding all of the debits, adding all of the credits, and then subtracting the two amounts.

All stockholders' equity accounts are increased by debits.

When a company incurs additional debt, which type of account is increased?

When setting up the numbering system for a company's chart of accounts:

The Financial Statements

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets, Natural Resources, Intangibles

Long-Term Investments the Time Value of Money

Liabilities

Stockholders Equity

The Income Statement, the Statement of Comprehensive Income, the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 2: Transaction Analysis

A trial balance:

When preparing a journal entry, debits are always listed before credits.

If a company declares and pays a dividend to its stockholders, both cash and expenses will decrease.

The journal is also known as the book of original entry.

When a company pays an amount it owes a creditor:

A company sold land for the same price that they paid for it last year. When entering this transaction in the journal, there will be a:

Information is taken from the ledger and the posted to the journal.

When journalizing and posting transactions in the books:

A trial balance has total debits of $720,000 and total credits of $850,000, with a debit balance of $65,000 for notes payable. This situation indicates:

The Accounts Receivable account for Rusty's Mechanic Shop had a beginning balance of $12,000. During the month, Rusty received payments of $7,000 on account and made sales on account of $16,000. The ending balance in the Accounts Receivable account is:

The rules for recording accounting transactions include all of the following EXCEPT:

An owner makes an investment of cash into the business. This transaction would include a:

The purchase of office computers for cash would include a debit to:

When a trial balance is out of balance due to a transposition error, the difference between total debits and total credits will be evenly divisible by 2.

A transaction is any event that has a financial impact on the business that can be measured reliably.

Accounts are listed in random order in a trial balance.

The balance of an account can be determined by adding all of the debits, adding all of the credits, and then subtracting the two amounts.

All stockholders' equity accounts are increased by debits.

When a company incurs additional debt, which type of account is increased?

When setting up the numbering system for a company's chart of accounts:

The Financial Statements

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets, Natural Resources, Intangibles

Long-Term Investments the Time Value of Money

Liabilities

Stockholders Equity

The Income Statement, the Statement of Comprehensive Income, the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Filters