Deck 2: Transaction Analysis

Question 1

Which of the following items would NOT be included in the journal entry for a transaction?

A)The titles of the accounts debited
B)The dollar amount credited
C)The source documents initiating the transaction
D)The date the accounting transaction was entered

Answer 1

C

Question 2

The normal balance of the Accounts Payable account is a because it is an) account.

A)debit, stockholders' equity
B)debit, asset
C)credit, liability
D)credit, expense

Answer 2

C

Question 3

The normal balance of Accounts Receivable is a because it is an)account.

A)credit, stockholders' equity
B)debit, expense
C)credit, liability
D)debit, asset

Answer 3

D

Question 4

The purchase of land for cash would:

A)have no effect on total assets.
B)decrease stockholders' equity.
C)increase total assets.
D)increase the total debits on the trial balance.

Question 5

The accounting transaction to record a loan would include a credit to:

A)Utilities Expense.
B)Notes Payable.
C)Accounts Receivable.
D)Cash.

Question 6

Which type of account is decreased when a company pays its employees with cash?

A)A prepaid asset
B)A liability
C)An asset
D)Owners' equity

Question 7

Consider the following transactions: I. Borrowed cash on a note payable, $80,000
II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200 Total liabilities would be:

A)$98,000.
B)$1,200.
C)$81,200.
D)$80,000.

Question 8

The normal balance of the Supplies account is a because it is an)account.

A)credit, liability
B)debit, stockholders' equity
C)debit, asset
D)credit, expense

Question 9

Which of the following statements regarding accounts is true?

A)Revenue is increased by a debit; an expense is increased by a credit.
B)Dividends are decreased by debits and increased by credits.
C)A liability is increased by a debit and decreased by a credit.
D)An asset is increased by a debit and decreased by a credit.

Question 10

A company received cash in exchange for issuing stock. This transaction increased assets and:

A)increased liabilities.
B)increased revenues.
C)increased expenses.
D)increased equity.

Question 11

A trial balance prepared by an inexperienced accountant showed total debits of $540,000 and total credits of $450,000. This discrepancy is most likely due to which type of error?

A)Failure to post a transaction
B)Mislabeling
C)Slide
D)Transposition

Question 12

A company paid cash for employee wages. This transaction:

A)decreased cash and decreased revenues.
B)decreased cash and increased expenses.
C)increased cash and decreased expenses.
D)increased cash and increased expenses.

Question 13

When a company performs a service and immediately collects the cash from the customer, which of the following would occur?

A)Expenses would decrease.
B)Stockholders' equity would decrease.
C)Assets would decrease.
D)Net income would increase.

Question 14

Consider the following transactions: I. Borrowed cash on a note payable, $80,000
II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200 Total assets would be:

A)$96,800.
B)$98,000.
C)$90,000.
D)$88,000.

Question 15

The entry to record the purchase of supplies on account would include a debit to:

A)Accounts Payable.
B)Supplies Expense.
C)Retained Earnings.
D)Supplies.

Question 16

A stockholder's investment of land and a building into the business would include a debit to:

A)Building and a credit to Retained Earnings.
B)Land and a credit to Common Stock.
C)Common Stock and a credit to Building.
D)Land and a credit to Building.

Question 17

The payment of salaries to employees would:

A)increase liabilities and increase net income.
B)decrease net income and decrease assets.
C)decrease assets and decrease liabilities.
D)increase assets and increase liabilities.

Question 18

Which of the following business events would NOT be recorded in a company's accounting records?

A)The company signed a contract to provide services in the next accounting period for $125,000.
B)The company paid a monthly utility bill of $1,000.
C)The company issued 100 shares of common stock for $75,000.
D)The company purchased two acres of land for future plant expansion for $600,000.

Question 19

A business purchases a truck by signing a note payable to the seller. This transaction would include a:

A)debit to Note Payable.
B)credit to Note Payable.
C)debit to Prepaid Maintenance.
D)credit to Truck.

Question 20

Performing services on account would:

A)decrease revenue and decrease stockholders' equity.
B)increase net income and stockholders' equity.
C)decrease both assets and liabilities.
D)increase assets and decrease stockholders' equity.

Question 21

Receiving a payment from a customer on account would:

A)decrease liabilities.
B)increase stockholders' equity.
C)have no effect on total assets.
D)increase stockholders' equity.

Question 22

A company purchased office supplies for cash. This transaction increased assets and:

A)increased revenues.
B)increased equity.
C)increased liabilities.
D)decreased assets.

Question 23

If a person starting a business had an investment of a building, valued at $300,000 with an $180,000 outstanding mortgage, the effect would be to:

A)increase stockholders' equity by $120,000.
B)increase assets by $120,000.
C)increase assets by $180,000.
D)increase stockholders' equity by $300,000.

Question 24

Making a cash payment to settle a debt would include a:

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

Question 25

A chronological record or history)of an entity's transactions is called a:

A)journal.
B)ledger.
C)poster.
D)T- account.

Question 26

Purchasing a three- year insurance policy for cash would include a:

A)credit to Prepaid Insurance.
B)debit to Prepaid Insurance.
C)credit to Insurance Expense.
D)debit to Insurance Expense.

Question 27

The normal balance of the Common Stock account is a because it increases .

A)debit, assets
B)debit, expenses
C)credit, stockholders' equity
D)debit, stockholders' equity

Question 28

A chart of accounts is:

A)a list of all of the accounts of the organization.
B)a source document.
C)prepared as the first step in analyzing transactions.
D)a list of all of the accounts of the organization and their related account numbers.

Question 29

Double- entry accounting means that each transaction:

A)debits at least one account and credits at least one account.
B)is recorded in both the journal and in the ledger.
C)increases at least one account and decreases at least one account.
D)affects both an income statement account and a balance sheet account.

Question 30

Which elements)of an accounting system provides)information about the balance in each account?

A)Source documents
B)Journals
C)Accrual record
D)Ledgers

Question 31

Debits to revenue accounts ultimately result in an):

A)increase in owners' equity and assets.
B)decrease in owners' equity and assets.
C)increase in liabilities assets.
D)decrease in assets and liabilities.

Question 32

A trial balance has which of the following features?

A)Totals for all accounts listed in the ledger
B)Totals for balance sheet accounts only
C)Totals for income statement accounts only
D)Both A and B are correct.

Question 33

A trial balance is:

A)a list of balance sheet accounts with their balances.
B)prepared before the posting process is completed.
C)a list of all accounts with their balances.
D)a list of income statement accounts with their balances.

Question 34

If the debit amount of an entry to record the purchase of supplies on account was not posted:

A)liabilities would be understated.
B)liabilities would be overstated.
C)assets would be understated.
D)assets would be overstated.

Question 35

The entry to record the payment of salaries to employees would include a:

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

Question 36

Consider the following transactions: I. Owners invested $8,000 cash to begin the business
II. Provided services for cash, $6,000
III. Provided services on account, $4,000
IV. Paid cash for expenses, $7,500
How much cash does the business have?

A)$ 2,500
B)$ 6,500
C)$ 4,500
D)$10,500

Question 37

In accounting, the process of posting involves transferring data from:

A)the source documents to the journal.
B)the source documents to the ledger.
C)the journal to the ledger.
D)the ledger to the journal.

Question 38

Notes payable, accounts payable, taxes payable and salaries payable are all examples of:

A)revenues.
B)expenses.
C)assets.
D)liabilities.

Question 39

Accounting transactions are initially recorded in the:

A)poster.
B)ledger.
C)journal.
D)T- account.

Question 40

Which of the following is NOT an asset account?

A)Prepaid Rent
B)Accounts Receivable
C)Common Stock
D)All of these are asset accounts.

Question 41

Consider the following transactions: I. Owners invested $8,000 cash to begin the business
II. Provided services for cash, $6,000
III. Provided services on account, $4,000
IV. Paid cash for expenses, $7,500
How much net income did the business have?

A)$6,000
B)$2,500
C)$4,000
D)$3,000

Question 42

Which of the following statements regarding a trial balance is true?

A)A trial balance may be taken at any time during the accounting period.
B)A trial balance shows that total debits equals total credits.
C)A trial balance is a list of all accounts with their balances.
D)All of the above is true.

Question 43

Receiving a check from a customer on account would include a credit to:

A)Cash.
B)Sales Revenue.
C)Accounts Payable.
D)Accounts Receivable.

Question 44

Paying a dividend to the company's stockholders would include a debit to:

A)Accounts Payable and a credit to Retained Earnings.
B)Retained Earnings and a credit to Cash.
C)Dividends and a credit to Cash.
D)Cash and a credit to Dividends.

Question 45

The owner of a business paid cash from his personal checking account to purchase an automobile for his personal use. This transaction:

A)is not a transaction recognized by the business.
B)decreased cash and increased expenses.
C)increased assets and increased owners' equity.
D)increased a liability account and increased liabilities.

Question 46

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

A)debit, expenses
B)debit, assets
C)debit, stockholders' equity
D)credit, stockholders' equity

Question 47

The payment of an amount owed to a creditor would:

A)decrease liabilities.
B)decrease assets.
C)increase net income.
D)both decrease assets and decrease liabilities.

Question 48

Which of the following transactions would increase total assets? I. Borrowed cash on a note payable, $80,000
II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200

A)I, II, and III
B)I and II
C)I and III
D)All of these answers are correct.

Question 49

The collection of cash from a cash sale would:

A)have no effect on net income or stockholders' equity.
B)increase assets and decrease liabilities.
C)decrease assets and increase net income.
D)increase assets and stockholders' equity.

Question 50

The normal balance of an expense account is a because expenses decrease .

A)debit, expenses
B)debit, assets
C)debit, stockholders' equity
D)credit, stockholders' equity

Question 51

A company paid cash for an amount owed to a creditor. This transaction decreased cash and:

A)decreased expenses.
B)increased expenses.
C)decreased liabilities.
D)decreased revenues.

Question 52

The normal balance of a revenue account is a because revenues increase .

A)debit, expenses
B)debit, stockholders' equity
C)credit, stockholders' equity
D)debit, assets

Question 53

The trial balance is used to determine whether:

A)total assets equal total liabilities.
B)total revenues plus gains equal total expenses plus losses.
C)total increases in accounts equal total decreases in accounts.
D)total debits equal total credits.

Question 54

Accounts are grouped together in a book called the:

A)trial balance.
B)ledger.
C)journal.
D)accounting equation.

Question 55

The results of operations are reported on the:

A)statement of financial position.
B)trial balance.
C)statement of operation.
D)statement of stockholders' equity.

Question 56

The purchase of an automobile involving a cash down payment and a promise to pay the balance in the future would include a debit to:

A)Cash and a credit to Automobile.
B)Cash and a debit to Note Payable.
C)Note Payable and a credit to Cash.
D)none of the above.

Question 57

Paying a utility bill as soon as it was received would:

A)increase owners' equity.
B)decrease revenues.
C)increase expenses.
D)increase liabilities.

Question 58

Cash dividends paid to the stockholders will:

A)decrease assets and decrease stockholders' equity.
B)increase assets and increase liabilities.
C)have no effect on stockholders' equity or revenue.
D)increase assets and decrease liabilities.

Question 59

The process of transferring information from the journal to the ledger is known as:

A)converting.
B)posting.
C)ledgerizing.
D)bookkeeping.

Question 60

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

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

Question 61

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

A)debit to Cash.
B)debit to Prepaid Rent.
C)credit to Revenue.
D)debit to Rent Expense.

Question 62

Purchasing supplies on account would:

A)increase total assets and increase total liabilities.
B)increase total assets and decrease total liabilities.
C)increase total liabilities and increase stockholders' equity.
D)increase total liabilities and decrease total assets.

Question 63

The normal balance of Dividends is a because it is an)_ account.

A)debit, asset
B)debit, stockholders' equity
C)credit, liability
D)credit, stockholders' equity

Question 64

All of the following accounts would be considered assets EXCEPT for:

A)prepaid expenses.
B)notes receivable.
C)retained earnings.
D)cash.

Question 65

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

A)Cash.
B)Office Furniture.
C)Office Furniture Expense.
D)Accounts Payable.

Question 66

A company performed services for a customer on account. This transaction increased assets and:

A)increased revenues.
B)increased expenses.
C)increased liabilities.
D)decreased equity.

Question 67

Prepaid expense accounts appear on:

A)both the income statement and balance sheet.
B)the balance sheet.
C)the income statement.
D)the statement of retained earnings and on the income statement.

Question 68

What is one of the first steps in the journalizing process?

A)Identify the transaction from source documents and other information.
B)Post the transaction to the ledger.
C)Enter the transaction in the journal.
D)Determine what accounts will be affected and whether to debit or credit them.

Question 69

What type of account is prepaid insurance?

A)An asset
B)A liability
C)An expense
D)Stockholders' equity

Question 70

Borrowing money from the bank by signing a note payable would:

A)increase stockholders' equity.
B)decrease liabilities.
C)have no effect on stockholders' equity.
D)increase net income.

Question 71

The left side of a T- account is always the:

A)credit side.
B)increase side.
C)decrease side.
D)debit side.

Question 72

Which type of account is increased when a company records a debt?

A)Liability
B)Retained earnings
C)Expense
D)None of the above are correct.

Question 73

A trial balance prepared by an inexperienced accountant showed total debits of $360,000 and total credits of $36,000. This discrepancy is most likely due to which type of error?

A)Slide
B)Failure to post a transaction
C)Transposition
D)Mislabeling

Question 74

Which accounts are increased by debits?

A)Assets, expenses and owners' equity
B)Assets and owners' equity
C)Expenses and owners' equity
D)Assets, expenses and dividends

Question 75

When using a four- column ledger account format, the pair of columns on the far right is used to show the:

A)debit and credit amounts posted from journal entries.
B)transactions date and journal reference.
C)names of the accounts being debited and credited.
D)account balance.

Question 76

All information about a particular account is contained in the:

A)post closing trial balance.
B)trial balance.
C)journal.
D)ledger.

Question 77

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

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

Question 78

An account is increased by a debit and has a normal balance of a debit. This account is an)

A)liability account.
B)expense account.
C)asset account.
D)both an expense account and an asset account.

Question 79

When using a four- column ledger account format, the initial pair of columns is used to show the:

A)account balance.
B)names of the accounts being debited and credited.
C)debit and credit amounts posted from journal entries.
D)transactions date and journal reference.

Question 80

The journal entry to record performing a service on account would include a debit to:

A)Service Revenue Expense.
B)Cash.
C)Accounts Receivable.
D)Retained Earnings.