Question 1

For Expenses,the category of account and its normal balance are:

Accepted Answer

A)  Assets and a debit balance. 
B)  Owners' equity and a credit balance. 
C)  Liabilities and a credit balance. 
D)  Owners' equity and a debit balance. 
A)  Assets and a debit balance. 
B)  Owners' equity and a credit balance. 
C)  Liabilities and a credit balance. 
D)  Owners' equity and a debit balance.

Question 2

Which of the following accounts is a liability?

Accepted Answer

A)  Accounts payable 
B)  Prepaid expenses 
C)  Service revenue 
D)  Salary expense 
A)  Accounts payable 
B)  Prepaid expenses 
C)  Service revenue 
D)  Salary expense

Question 3

A liability account is increased by a debit.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following accounts decreases with a debit?

Accepted Answer

A)  Prepaid insurance 
B)  Bills payable 
C)  Land 
D)  Cash 
A)  Prepaid insurance 
B)  Bills payable 
C)  Land 
D)  Cash

Question 5

The following transactions for the month of March have been journalised and posted to the proper accounts.
Mar 1 Martinez invested $10,000 cash in his new design services business.
Mar 2 Paid the first month's rent of $500.
Mar 3 Purchased equipment by paying $1000 cash and executing a loan payable for $5000.
Mar 4 Purchased office supplies for $750 cash.
Mar 5 Billed a client for $11,000 of design services completed.
Mar 6 Received $7000 on account for the services previously recorded.
What is the ending balance in the Service revenue account?

Accepted Answer

A)  $17,000 
B)  $10,000 
C)  $7000 
D)  $11,000 
A)  $17,000 
B)  $10,000 
C)  $7000 
D)  $11,000

Question 6

Which of the following is the detailed record of the changes in a particular asset,liability or owners' equity?

Accepted Answer

A)  Ledger 
B)  Journal 
C)  Trial balance 
D)  Account 
A)  Ledger 
B)  Journal 
C)  Trial balance 
D)  Account

Question 7

An owner invests $20 000 in her new business by depositing the cash in the business bank account.Which account is debited?

Accepted Answer

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

Question 8

Which of the following statements is TRUE?

Accepted Answer

A)  A trial balance presents data in debit and credit format, but a balance sheet does not. 
B)  A trial balance is in the same format as a balance sheet. 
C)  A trial balance is created after the balance sheet is prepared. 
D)  A trial balance shows total amounts for assets, liabilities and equity. 
A)  A trial balance presents data in debit and credit format, but a balance sheet does not. 
B)  A trial balance is in the same format as a balance sheet. 
C)  A trial balance is created after the balance sheet is prepared. 
D)  A trial balance shows total amounts for assets, liabilities and equity.

Question 9

A business collects cash from a customer in payment of accounts receivable.Which account is credited?

Accepted Answer

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

Question 10

A book holding all of the accounts is called the:

Accepted Answer

A)  balance sheet. 
B)  ledger. 
C)  journal. 
D)  income statement. 
A)  balance sheet. 
B)  ledger. 
C)  journal. 
D)  income statement.

Question 11

A business purchases equipment by paying $9023 in cash and issuing a loan payable of $16,446.Which of the following occurs?

Accepted Answer

A)  Cash is debited for $9023, equipment is credited for $16,446 and loan payable is debited for $7423. 
B)  Cash is debited for $9023, equipment is debited for $16,446 and loan payable is credited for $25,469. 
C)  Cash is credited for $9023, equipment is debited for $25,469 and loan payable is credited for $16,446. 
D)  Cash is credited for $9023, equipment is credited for $25,469 and loan payable is debited for $16,446. 
A)  Cash is debited for $9023, equipment is credited for $16,446 and loan payable is debited for $7423. 
B)  Cash is debited for $9023, equipment is debited for $16,446 and loan payable is credited for $25,469. 
C)  Cash is credited for $9023, equipment is debited for $25,469 and loan payable is credited for $16,446. 
D)  Cash is credited for $9023, equipment is credited for $25,469 and loan payable is debited for $16,446.

Question 12

Which of the following accounts is an asset?

Accepted Answer

A)  Expenses 
B)  Drawings 
C)  Bills payable 
D)  Cash 
A)  Expenses 
B)  Drawings 
C)  Bills payable 
D)  Cash

Question 13

A trial balance is a list of all of the accounts with their balances.

Accepted Answer

A) True 
 B)False

Question 14

A business makes a cash payment of $12 000 to an account payable.Which account is credited?

Accepted Answer

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

Question 15

For Salary payable,the category of account and its normal balance are:

Accepted Answer

A)  Owners' equity and a credit balance. 
B)  Liabilities and a credit balance. 
C)  Assets and a credit balance. 
D)  Assets and a debit balance. 
A)  Owners' equity and a credit balance. 
B)  Liabilities and a credit balance. 
C)  Assets and a credit balance. 
D)  Assets and a debit balance.

Question 16

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

Accepted Answer

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

Question 17

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 a list of all accounts with their balances. 
C)  A trial balance is also known as a balance sheet. 
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 a list of all accounts with their balances. 
C)  A trial balance is also known as a balance sheet. 
D)  A trial balance is also known as the chart of accounts.

Question 18

Which of the following accounts is NOT an example of a liability?

Accepted Answer

A)  Accounts receivable 
B)  Bills payable 
C)  Accounts payable 
D)  Wages payable 
A)  Accounts receivable 
B)  Bills payable 
C)  Accounts payable 
D)  Wages payable

Question 19

A business makes a cash payment of $12 000 to an account payable.Which account is debited?

Accepted Answer

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

Question 20

A journal entry for a $240 payment to purchase office supplies was erroneously recorded as a debit to Office supplies for $600 and a credit to Cash for $240.Which of the following statements correctly states the effect of the error on the trial balance?

Accepted Answer

A)  The sum of the debits will exceed the sum of the credits by $240. 
B)  The sum of the debits will exceed the sum of the credits by $360. 
C)  The sum of the credits will exceed the sum of the debits by $360. 
D)  The sum of the debits will exceed the sum of the credits by $600. 
A)  The sum of the debits will exceed the sum of the credits by $240. 
B)  The sum of the debits will exceed the sum of the credits by $360. 
C)  The sum of the credits will exceed the sum of the debits by $360. 
D)  The sum of the debits will exceed the sum of the credits by $600.

Exam 2: Recording Business Transactions

For Expenses,the category of account and its normal balance are:

Which of the following accounts is a liability?

A liability account is increased by a debit.

Which of the following accounts decreases with a debit?

Which of the following is the detailed record of the changes in a particular asset,liability or owners' equity?

An owner invests $20 000 in her new business by depositing the cash in the business bank account.Which account is debited?

Which of the following statements is TRUE?

A business collects cash from a customer in payment of accounts receivable.Which account is credited?

A book holding all of the accounts is called the:

A business purchases equipment by paying $9023 in cash and issuing a loan payable of $16,446.Which of the following occurs?

Which of the following accounts is an asset?

A trial balance is a list of all of the accounts with their balances.

A business makes a cash payment of $12 000 to an account payable.Which account is credited?

For Salary payable,the category of account and its normal balance are:

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

Which of the following statements CORRECTLY describes a trial balance?

Which of the following accounts is NOT an example of a liability?

A business makes a cash payment of $12 000 to an account payable.Which account is debited?

A journal entry for a $240 payment to purchase office supplies was erroneously recorded as a debit to Office supplies for $600 and a credit to Cash for $240.Which of the following statements correctly states the effect of the error on the trial balance?

The Role of Accounting in Decision Making

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Non-Current Assets: Property, plant and Equipment, and Intangibles

Current Liabilities and Payroll

Non-Current Liabilities,debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Introduction to Managerial Accounting and the Master Budget

Job Costing

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

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