Deck 2: Recording Business Transactions

Question 1

Which of the following accounts is an asset?

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

Answer 1

D

Question 2

Which of the following accounts is an example of an owner's equity account?

A) Accounts payable
B) Equipment
C) Cash
D) Drawing

Answer 2

Drawing

Question 3

In a typical chart of accounts,liabilities appear before assets.

Answer 3

False

Question 4

In a typical chart of accounts,what information is provided along with the account name?

A) Account balance
B) Account number
C) Dates of transactions
D) Transaction amounts

Question 5

Accountants first record transactions in the:

A) chart of accounts.
B) trial balance.
C) journal.
D) ledger

Question 6

A journal is a chronological record of transactions.

Question 7

Which of the following accounts is an asset?

A) Cash
B) Notes payable
C) Drawing
D) Expenses

Question 8

Which of the following are accrued liabilities?

A) Taxes payable
B) Interest payable
C) Salary payable
D) All of the above

Question 9

A listing of all account titles in numerical order is a(n):

A) ledger.
B) journal.
C) income statement.
D) chart of accounts.

Question 10

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

Question 11

A chart of accounts is the book holding all of the company's accounts.

Question 12

Which of the following accounts is an example of a liability?

A) Service revenue
B) Building
C) Accounts receivable
D) Notes payable

Question 13

An account is the detailed record of the changes in a particular asset,liability,or owner's equity.

Question 14

Which of the following accounts is a liability?

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

Question 15

Which of the following accounts is an owner's equity account?

A) Accrued liability
B) Accounts payable
C) Prepaid expense
D) Capital

Question 16

Expenses are increases in owner's equity caused by providing goods or services for customers.

Question 17

Which of the following accounts is NOT an example of an asset?

A) Accounts receivable
B) Cash
C) Building
D) Notes payable

Question 18

Prepaid expenses are recorded as:

A) assets.
B) liabilities.
C) debits and credits.
D) owner's equity.

Question 19

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

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

Question 20

A trial balance is the list of all a company's accounts along with their account numbers.

Question 21

A liability account is increased by a debit.

Question 22

Which of the following accounts decreases with a debit?

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

Question 23

Both the date of the transaction and a brief description are included in a journal entry.

Question 24

Debit refers to the right side of the T-account,and credit refers to the left side.

Question 25

An account that normally has a debit balance may occasionally have a credit balance.

Question 26

The process of copying from the journal to the ledger is called posting.

Question 27

In the standard accounting system,we use double entry accounting,which means we record the dual effects of each transaction.

Question 28

When recording a transaction in a journal,the credit side is entered first,followed by the debit side.

Question 29

Which of the following accounts decreases with a credit?

A) Cash
B) Capital
C) Accounts payable
D) Notes Payable

Question 30

For liabilities and revenues,a debit increases the account.

Question 31

The owner's capital account is increased by a debit.

Question 32

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

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

Question 33

Which of the following accounts increases with a credit?

A) Cash
B) Capital
C) Accounts receivable
D) Prepaid expenses

Question 34

A book holding all of the accounts is called the:

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

Question 35

An asset account is increased by a debit.

Question 36

Assets,Drawing,and Expenses have a normal balance on the debit side.

Question 37

For assets and expenses,a debit increases the account.

Question 38

Which of the following is NOT part of owner's equity?

A) Accounts receivable
B) Capital
C) Notes payable
D) Both A and C

Question 39

Which of the following accounts increases with a debit?

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

Question 40

The drawing (withdrawals)account is increased by a debit.

Question 41

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

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

Question 42

Posting a transaction means:

A) calculating the balance in an account.
B) finding the account number in the chart of accounts.
C) recording the transaction including a brief explanation.
D) copying the information from the journal to the ledger.

Question 43

Which of the following groups of accounts BOTH normally have a debit balance?

A) Assets and Expenses
B) Revenues and Expenses
C) Liabilities and Owner's equity
D) Assets and Liabilities

Question 44

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

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

Question 45

Journalizing a transaction means:

A) calculating the balance in an account.
B) finding the account number in the chart of accounts.
C) recording the transaction, including a brief explanation.
D) copying the information from the journal to the ledger.

Question 46

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

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

Question 47

The accounting process of copying a transaction from the journal to the ledger is called:

A) journalizing.
B) posting.
C) proofing.
D) footing.

Question 48

Which of the following statements about expenses is CORRECT?

A) Expenses increase owner's equity, so an expense account's normal balance is a credit balance.
B) Expenses decrease owner's equity, so an expense account's normal balance is a credit balance.
C) Expenses increase owner's equity, so an expense account's normal balance is a debit balance.
D) Expenses decrease owner's equity, so an expense account's normal balance is a debit balance.

Question 49

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

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

Question 50

In the accounting system,the first place that transactions are recorded is the ledger.

Question 51

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

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

Question 52

The balance of an account is the:

A) amount remaining in an account.
B) account number, as shown in the chart of accounts.
C) sum of the debits only.
D) sum of the credits only.

Question 53

A journal entry includes BOTH debit and credit amounts.

Question 54

Which of the following groups of accounts BOTH normally have a credit balance?

A) Assets and Expenses
B) Revenues and Expenses
C) Liabilities and Owner's equity
D) Assets and Liabilities

Question 55

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

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

Question 56

After initially recording a transaction,the data is then copied,or posted,to the:

A) chart of accounts.
B) ledger.
C) trial balance.
D) journal.

Question 57

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

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

Question 58

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

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

Question 59

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

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

Question 60

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

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

Question 61

A business purchases equipment for cash in the amount of $8,000.Which account is debited?

A) Cash
B) Accounts payable
C) Utilities expense
D) Equipment

Question 62

When a business records an expense incurred,the expense account is always credited.

Question 63

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

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

Question 64

Which of the following statements about revenue is CORRECT?

A) Revenues decrease owner's equity, so a revenue account's normal balance is a credit balance.
B) Revenues decrease owner's equity, so a revenue account's normal balance is a debit balance.
C) Revenues increase owner's equity, so a revenue account's normal balance is a debit balance.
D) Revenues increase owner's equity, so a revenue account's normal balance is a credit balance.

Question 65

When a business records revenue earned,the revenue account is always credited.

Question 66

A business purchased $200 of supplies on account and recorded the following journal entry: $$\begin{array} { | l | r | r | } \hline \text { Supplies } & 200 & \\\hline \text { Accounts payable } & & 200 \\\hline\end{array}$$ Which of the following sets of ledger accounts reflect the posting of this transaction?

A)
$\begin{array}{l|l}{\text { Supplies }} \\\hline & 200\end{array}$$\begin{array}{l}\text { Accounts payable }\\\begin{array}{r|r}\hline 200 &\end{array}\end{array}$
B)
$\begin{array}{l|l}{\text { Supplies }} \\\hline 200&\end{array}$$\begin{array}{l}\text { Accounts payable }\\\begin{array}{r|r}\hline 200 &\end{array}\end{array}$
C)
$\begin{array}{l|l}{\text { Supplies }} \\\hline 200&\end{array}$$\begin{array}{l}\text { Accounts payable }\\\begin{array}{r|r}\hline &200 &\end{array}\end{array}$
D)
$\begin{array}{l|l}{\text { Supplies }} \\\hline &200&\end{array}$$\begin{array}{l}\text { Accounts payable }\\\begin{array}{r|r}\hline &200 &\end{array}\end{array}$

Question 67

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

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

Question 68

The normal sequence of information flow in an accounting system is:

A) ledger, journal, source document.
B) journal, source document, ledger.
C) source document, journal, ledger.
D) source document, ledger, journal.

Question 69

Which of the following is the order of steps to journalize an entry?

A) Identify each account affected, determine increase or decrease in each account, record the transaction.
B) Identify each account affected, record the transaction, determine increase or decrease in each account.
C) Record the transaction, identify each account affected, determine increase or decrease in each account.
D) Determine increase or decrease in each account, identify each account affected, record the transaction.

Question 70

When a business collects cash,the cash account is always debited.

Question 71

When a business makes a cash payment,the cash account is always debited.

Question 72

A business renders services to a customer for $16,000 on account.Which account is debited?

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

Question 73

A business purchases equipment for cash in the amount of $8,000.Which account is credited?

A) Cash
B) Accounts payable
C) Utilities expense
D) Equipment

Question 74

An owner invests $20,000 in her new business by depositing the cash in the business's checking account.Which account is credited?

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

Question 75

Which of the following is NOT an example of a source document?

A) Journal
B) Sales invoice
C) Bank deposit slip
D) Purchase invoice

Question 76

The first step of journalizing an entry is to:

A) post the accounts to the ledger.
B) identify each account affected and its type.
C) determine whether each account is increased or decreased.
D) record the transaction in the journal, including a brief explanation.

Question 77

A business renders services to a customer for $16,000 on account.Which account is credited?

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

Question 78

A business renders service to a client and sends out a sales invoice.The amount will be collected from the customer at a later time.Which of the following would be TRUE at the time when the invoice is sent out?

A) Owner's equity will decrease.
B) Total liabilities will increase.
C) Total assets will decrease.
D) Net income will increase.

Question 79

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

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

Question 80

Which of the following is the last step of journalizing an entry?

A) Post the accounts to the ledger.
B) Identify each account affected and its type.
C) Record the transaction in the journal, including a brief explanation.
D) Determine whether each account has increased or decreased.