Deck 3: The Double-Entry Framework

Question 1

Prepaid Insurance is an asset account.

Answer 1

True

Question 2

To debit an account is to enter an amount on the left side of the account.

Answer 2

True

Question 3

The difference between the footings of an account is called the balance.

Answer 3

True

Question 4

Equity accounts normally have debit balances.

Question 5

When debits equal credits for a transaction, the accounting equation is in balance.

Question 6

The sum of the debits must equal the sum of the credits on the trial balance.

Question 7

Revenues decrease owner's equity.

Question 8

Prepaid insurance and supplies are assets because they will provide benefits for more than one month.

Question 9

When services are performed for which payment will be received later, accounts receivable increases.

Question 10

Expense accounts normally have debit balances.

Question 11

Payment of rent on account decreases the Cash account.

Question 12

At least two accounts are affected by every transaction.

Question 13

Withdrawals of cash and other assets by the owner for personal reasons decrease owner's equity.

Question 14

A T account has three parts: the title, the debit side, and the credit side.

Question 15

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called complex-entry accounting.

Question 16

An increase or decrease in any asset, liability, owner's equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements.

Question 17

If services for the month total $7,000 in cash and $1,500 on account, the revenue account increases $5,500.

Question 18

The trial balance is used in preparing financial statements.

Question 19

Liability accounts normally have debit balances.

Question 20

A credit increases liabilities and owner's equity.

Question 21

An account is a form or record used to keep track of the increases or decreases in the individual assets, liabilities, owner's equity, revenues, and expenses of a business entity.

Question 22

A trial balance is taken periodically to check the equality of the debits and credits.

Question 23

Services on account increase a revenue account and increase the cash account.

Question 24

A trial balance is a formal business report.

Question 25

John received $350 for delivery services; this transaction increased Cash and revenue.

Question 26

A trial balance is a list of all accounts showing the title and balance of each account.

Question 27

Elysa paid $135 for utilities for her office; this transaction increased Cash and the expense account.

Question 28

The balance of a T account is on the side with the larger footing.

Question 29

If services for the month total $3,300 in cash and $700 on account, Accounts Receivable increases $700.

Question 30

Connie made a purchase on account of printer paper to last for about three months; this transaction increased Supplies and decreased Accounts Payable.

Question 31

Kate made a $475 payment on her company van. She should credit Accounts Payable and debit the automobile account.

Question 32

The owner's capital account normally has a credit balance.

Question 33

Craig deposits $6,000 in an account to start a new business. He should debit Cash and credit his capital account.

Question 34

The accounting equation must remain in balance.

Question 35

Mandy withdraws $600 from her business. This transaction increases cash but decreases owner's equity.

Question 36

If services for the month total $3,300 in cash and $700 on account, the cash account increases $700.

Question 37

Owner's equity includes four types of accounts: Owner's Capital, Revenues, Expenses, and Owner's Drawing.

Question 38

The purchase of a supply of markers for three months should be recorded as an increase in revenue and a decrease in cash.

Question 39

Increases in owner's equity are entered as credits.

Question 40

The standard T account includes all of the following EXCEPT

A) a credit side.
B) a debit side.
C) a title.
D) the current date.

Question 41

Totals on the debit and credit sides to determine the balance of an account are known as

A) rulings.
B) credits.
C) debits.
D) footings.

Question 42

A debit represents an increase in

A) an asset.
B) a liability.
C) owner's equity.
D) revenues.

Question 43

Examples of revenue accounts include all of the following EXCEPT

A) Wages.
B) Sales.
C) Delivery Fees.
D) Professional Fees.

Question 44

The capital account

A) decreases with increased revenue.
B) increases with increased expenses.
C) has a normal balance of a debit.
D) increases when the owner invests money in the business.

Question 45

The difference between the total debits and credits to an account is called a

A) balance.
B) ruling.
C) footing.
D) trial balance.

Question 46

Accounts that affect owner's equity are

A) assets, capital, and revenue.
B) capital, liabilities, and expenses.
C) expenses, capital, and revenue.
D) drawing, assets, and liabilities.

Question 47

Liability, owner's capital, and revenue accounts normally have

A) debit balances.
B) large balances.
C) negative balances.
D) credit balances.

Question 48

Revenues

A) decrease liabilities.
B) decrease cash.
C) increase expenses.
D) increase owner's equity.

Question 49

A debit

A) is on the left side.
B) decreases assets.
C) increases liabilities.
D) increases owner's equity.

Question 50

An example of an expense is

A) prepaid insurance.
B) advertising.
C) accounts payable.
D) cash.

Question 51

The drawing account should be used to show

A) the amount the owner has invested in the business.
B) the amount the owner has taken out of the business.
C) the amount the business has earned.
D) the amount the business has spent.

Question 52

Asset and expense accounts normally have

A) credit balances.
B) large balances.
C) debit balances.
D) negative balances.

Question 53

Increases are entered on the credit side of a(n)

A) asset account.
B) liability account.
C) expense account.
D) drawing account.

Question 54

A cash payment on a loan affects which of the following accounts?

A) Cash and Accounts Receivable
B) Cash and Notes Payable
C) Cash and an expense account
D) Cash and a revenue account

Question 55

An increase in an asset account may be offset by a(n)

A) decrease in a liability account.
B) increase in an expense account.
C) increase in owner's equity.
D) decrease in owner's equity.

Question 56

can be either a debit or a credit balance.
B) is a debit balance.
C) is a credit balance.
D) is called a footing.

Question 57

A credit

A) increases assets.
B) is on the right side.
C) decreases liabilities.
D) decreases owner's equity.

Question 58

The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called

A) single-entry accounting.
B) compound-entry accounting.
C) multiple-entry accounting.
D) double-entry accounting.

Question 59

An investment of cash in a business by the owner

A) increases cash.
B) decreases owner's equity.
C) appears in a liability account.
D) represents an obligation of the business.

Question 60

A T account has which of the following three major parts?

A) a title, a debit side, and a credit side
B) a title, a current date, and a balance
C) a debit side, a credit side, and a total column
D) a debit side, a credit side, and a balance

Question 61

Match the terms with the definitions.a.balance
b.credit
c.credit balance
d.debit
e.debit balance
f.double-entry accounting
g.footings
h.normal balance
i.T account
j.trial balance
The normal balance of liability, owner's equity, and revenue accounts.

Question 62

Match the terms with the definitions.a.balance
b.credit
c.credit balance
d.debit
e.debit balance
f.double-entry accounting
g.footings
h.normal balance
i.T account
j.trial balance
A system in which each transaction has a dual effect on the accounting elements.

Question 63

A purchase of an asset on account

A) increases cash.
B) decreases owner's equity.
C) increases assets.
D) decreases expenses.

Question 64

Match the terms with the definitions.a.balance
b.credit
c.credit balance
d.debit
e.debit balance
f.double-entry accounting
g.footings
h.normal balance
i.T account
j.trial balance
To enter an amount of the left side of an account.

Question 65

The purchase of an asset on account and making a partial payment results in all of the following EXCEPT

A) an increase in an asset account.
B) a decrease in the Cash account.
C) a balanced accounting equation.
D) an increase in owner's equity.

Question 66

Match the terms with the definitions.a.balance
b.credit
c.credit balance
d.debit
e.debit balance
f.double-entry accounting
g.footings
h.normal balance
i.T account
j.trial balance
The total dollar amounts on the debit and credit sides of an account.

Question 67

Footings in T accounts

A) appear to the left of the amount columns.
B) are used for accounts with more than one debit or credit.
C) are only used in asset accounts.
D) are used for accounts with only one entry.

Question 68

Match the terms with the definitions.a.balance
b.credit
c.credit balance
d.debit
e.debit balance
f.double-entry accounting
g.footings
h.normal balance
i.T account
j.trial balance
A list of accounts, showing the title and balance of each account, used to prove that the debit balances equal the credit balances.

Question 69

Payment of office rent represents a decrease in

A) a liability account.
B) expenses.
C) cash.
D) a revenue account.

Question 70

The balance sheet

A) is a list of all accounts showing the title and balance of each account.
B) is used as an aid in preparing the trial balance and income statement.
C) is for a period of time.
D) shows that assets equal liabilities plus owner's equity.

Question 71

Match the terms with the definitions.a.balance
b.credit
c.credit balance
d.debit
e.debit balance
f.double-entry accounting
g.footings
h.normal balance
i.T account
j.trial balance
A tool used to illustrate the double-entry accounting system showing the account title, left side, and right side.

Question 72

Match the terms with the definitions.a.balance
b.credit
c.credit balance
d.debit
e.debit balance
f.double-entry accounting
g.footings
h.normal balance
i.T account
j.trial balance
The side that increases an account.

Question 73

Match the terms with the definitions.a.balance
b.credit
c.credit balance
d.debit
e.debit balance
f.double-entry accounting
g.footings
h.normal balance
i.T account
j.trial balance
The normal balance of asset, expense, and drawing accounts.

Question 74

Match the terms with the definitions.a.balance
b.credit
c.credit balance
d.debit
e.debit balance
f.double-entry accounting
g.footings
h.normal balance
i.T account
j.trial balance
The difference between the footings of an account.

Question 75

Payment of a telephone bill represents an increase in a(n)

A) asset.
B) liability.
C) revenue.
D) expense.

Question 76

Falana receives payment for services performed in the amount of $3,147. This transaction

A) decreases Wage Expense.
B) increases Cash.
C) increases owner's equity.
D) decreases Cash.

Question 77

Match the terms with the definitions.a.balance
b.credit
c.credit balance
d.debit
e.debit balance
f.double-entry accounting
g.footings
h.normal balance
i.T account
j.trial balance
To enter an amount on the right side of an account.

Question 78

Footings in T accounts

A) appear after each entry.
B) always appear on the right side.
C) are unnecessary when there is only one entry.
D) appear only in accounts carried over from the previous accounting period.