Deck 2: Analyzing and Recording Business Transactions

Question 1

A chart of accounts includes:

A) balances of accounts.
B) names of customers
C) assets and liabilities.
D) accounts with unusual balances.
E) account activity. F) vendor account balances.

Answer 1

assets and liabilities.

Question 2

Monies owed to a company on a written promise to pay a fixed amount of money by a certain date would be called a __________.

Answer 2

note payable

Question 3

Items such as wages and interest that have been incurred, but not yet paid, are called __________.

Answer 3

accrued liabilities

Question 4

Which of the following would start with a 2 in the chart of accounts?

A) Income taxes to be paid and wages to be paid
B) Common shares and preferred shares
C) Cash and accounts receivable
D) Sales and fees revenue
E) Marketing expense and rent expense

Question 5

Items of value that a company owns are called shareholders' equity.

Question 6

Which of the following is a revenue account?

A) Professional fees
B) Accounts Payable
C) Accounts Receivable
D) Wages
E) Cash

Question 7

Dividends, revenues, and expenses all:

A) start with the same chart of accounts number.
B) start with different chart of accounts numbers.
C) appear in the chart of accounts under assets.
D) appear in the chart of accounts under liabilities.
E) do not appear in the chart of accounts.

Question 8

An account starting with a number 1 would indicate __________.

Question 9

Accounts that start with the numbers 6-9 would probably be __________.

Question 10

Which of the following would start with a 1 in the chart of accounts?

A) Land and buildings
B) Depreciation expense and marketing expense
C) Merchandise sales and rent revenue
D) Common shares and cash
E) Accounts Payable and Notes Payable

Question 11

Accounts starting with the number 4 would typically represent __________.

Question 12

The order in which accounts appear in the chart of accounts is: __________.

Question 13

The shareholders' equity section would include the accounts such as retained earnings and revenues.

Question 14

Marketing expenditures account 511 would belong to what category of accounts?

Question 15

Dividends are paid with cash to shareholders. Dividends are in what category of the chart of accounts?

A) Revenue
B) Assets
C) Shareholders' Equity
D) Liabilities
E) Revenue.

Question 16

Which of the following is an expense account?

A) Prepaid insurance
B) Advertising
C) Accounts payable
D) Cash
E) Notes payable

Question 17

A listing of all accounts in numerical order is called a chart of accounts.

Question 18

An account numbered 321 would be considered a shareholders' equity account as it begins with a 3.

Question 19

Account titles such as marketing expense and depreciation expense would be numbered starting with a 3.

Question 20

Which is part of shareholders' equity?

A) Cash
B) Notes Payable
C) Dividends
D) Assets
E) Liabilities

Question 21

Payment of a telephone bill represents a(n) __________.

Question 22

Review the transactions below and determine whether you would use a debit or a credit to record the following changes. Indicate your decision by entering "Debit" or "Credit" in the right-hand column.

Question 23

List the order in which each of the following accounts would appear in a chart of accounts.
Utilities expenses, Tax return revenue, Accounts receivable, Income taxes payable

Question 24

A promissory note owed to another company would most likely appear in which categories?

Question 25

For the accounts listed below, identify the type of account. Is it an (A) Asset, (L) Liability, (S) Shareholders equity, (R) Revenue, or (E) Expense.
Accounts Payable
Accounts Receivable
Building
Cash
Common Shares
Dividends
Equipment
Inventory
Land
Notes Payable
Office Equipment
Office Supplies
Rental Expense
Service Revenue
Travel Expense
Utilities Expense
Wages Expense

Question 26

The debit (left) side of an account always indicates an increase in the value of the account.

Question 27

All payables are listed as __________.

Question 28

Net income and dividends are part of __________.

Question 29

Double-entry accounting requires that every business transaction impacts at least two different accounts.

Question 30

Land, cash, office equipment, and accounts receivable belong to what category of accounts?

Question 31

The credit (right) side of an account shows an increase or decrease depending upon the type of account.

Question 32

Obligations that are owed to others due to past transactions are categorized as __________.

Question 33

Accounts that decrease on the credit side are liabilities, common shares, revenues, and retained earnings.

Question 34

Accounts that increase on the credit side are assets, dividends, and expenses.

Question 35

For the following general ledger accounts, identify the normal balance of the account.
Example: Accounts Payable Credit
Accounts Receivable
Building
Cash
Common Shares
Dividends
Equipment
Inventory
Land
Notes Payable
Office Equipment
Office Supplies
Rental Expense
Service Revenue
Travel Expense
Utilities Expense
Wages Expense

Question 36

For the accounts listed below, determine the normal balance of the account is it a debit or credit.

Question 37

A type of company asset in which a customer owes the company money would be a __________.

Question 38

Obligations owed by a company to banks, for instance, are called __________.

Question 39

A T-account is a way to visualize the increases and decreases to the value of an account.

Question 40

Expenses paid in advance such as rent and insurance are classified as prepaid expenses. Into what category are they placed?

Question 41

Debit means:

A) decrease.
B) increase.
C) the right side of an account.
D) the left side of an account.
E) the total of the T-account.

Question 42

The T-account aids in separating:

A) increases and decreases in an account.
B) the equality of the credits.
C) the equality of debits and credits in the accounting equation.
D) the balances of all of the accounts.
E) errors and omissions.

Question 43

A T-account has a $759 debit balance. This account is most likely:

A) accounts payable.
B) sales revenue.
C) accounts receivable.
D) common share.
E) notes payable.

Question 44

The retained earnings accounts of dividends, revenues, and expenses have normal balances of __________, __________, and __________, respectively.

Question 45

Which of the following is an unofficial tool of accounting?

A) Account
B) T-account
C) Debit
D) Credit
E) Accountant

Question 46

An investment of cash in a business increases which account?

Question 47

What is the normal account balance for revenue, accounts receivable, and common shares?

Question 48

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

A) single-entry accounting.
B) double-entry accounting.
C) compound-entry accounting.
D) multiple-entry accounting.
E) re-allocation of accounting.

Question 49

A T-account has a $509 credit balance. This account is most likely:

A) common shares.
B) land.
C) advertising expense.
D) dividends.
E) cash.

Question 50

Name the three major parts of a T-account.

Question 51

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

A) trial balance.
B) sub-total.
C) ruling.
D) balance.
E) normal balance.

Question 52

Office furniture, wages payable, and dividends have normal balances of __________, __________, and __________, respectively.

Question 53

An example of accounts with normal debit balances would be:

A) liabilities.
B) expenses.
C) revenues.
D) shareholders' equity.
E) retained earnings

Question 54

Normal balance refers to the positive increase of an account and identifies the side of the account (Debit or Credit) to which this positive balance is recorded.

Question 55

A T-account has a $382 debit balance. This account is most likely:

A) income taxes payable.
B) common shares.
C) cash.
D) magazine sales.
E) sales revenue.

Question 56

Accounts payable, taxes payable, and notes payable increase on the debit side and decrease on the credit side.

Question 57

A T-account has a $922 credit balance. This account is most likely:

A) office equipment.
B) rent expense.
C) dividends.
D) sales revenue.
E) cash.

Question 58

A T-account has a $299 debit balance. This account is most likely:

A) accounts receivable.
B) bicycle repairs revenue.
C) wages payable.
D) common shares.
E) service fees.

Question 59

An example of accounts with normal credit balances would be:

A) revenues.
B) assets.
C) expenses.
D) dividends.
E) accounts receivable.

Question 60

Credit means:

A) decrease.
B) increase.
C) the right side of an account.
D) the left side of an account.
E) the total of the T-account.

Question 61

Chronological order dictates the order in which transactions are journalized.

Question 62

Once you post the transaction to the general ledger, you must go back to the general journal and fill in:

A) the date.
B) the amount debited or credited.
C) the posting reference column with the account number of the posting.
D) the account name that was involved in the transaction.
E) the dollar value.

Question 63

Every entry in the general journal should include all of the following EXCEPT:

A) the title of each account affected.
B) the amounts of debits and credits.
C) a brief description of the transaction.
D) the balance of the accounts affected.
E) debits and credits.

Question 64

The posting reference column of the general journal will include the number of the account to which the information is being posted.

Question 65

Cash, common shares, and advertising expense have normal balances of __________, __________, and __________, respectively.

Question 66

Journalizing is the transfer of information from the general journal to the general ledger.

Question 67

The general journal was developed to organize transactions by account.

Question 68

The total amount of debits must equal the total amount of credits. This is a rule of __________.

Question 69

The sunglasses Hut pays wages in the amount of $13,579. Provide the transaction details.

Question 70

The posting reference column of the general ledger shows the sources of the transferred information.

Question 71

The posting reference column of the general journal provides a cross-reference between the:

A) ledger and accounts.
B) journal and ledger.
C) ledger and financial statements.
D) journal and financial statements.
E) ledger and customers.

Question 72

The __________ keeps a running balance of an individual account.

Question 73

Dividends, accounts receivable, and buildings have normal balances of __________, __________, and __________, respectively.

Question 74

Instead of T-accounts, businesses more than likely use a:

A) chart of accounts.
B) balance sheet.
C) general ledger.
D) general journal.
E) income statement.

Question 75

The general journal is used to record only the revenue transactions of a business.

Question 76

The act of recording a transaction is called "journalizing".

Question 77

The general ledger is arranged in the __________order of the chart of accounts.

Question 78

Freddy's Fir Tree Company is a new business. The following accounts are required in the general ledger.

Organize the accounts into the order in which they should appear in the general ledger of Freddy's Fir Tree Company and assign account numbers.
Use the following system to assign account numbers.
1000-1999 Assets
2000-2999 Liabilities
3000-3999 Shareholder's equity account
4000-4999 Revenues
5000-5999 Expenses

Question 79

The __________ indicates where the information originated and to where the information was transferred.

Question 80

Transactions are recorded in order of the dollar amount of the transaction.