Deck 2: Recording Business Transactions

Question 1

Prepaid expenses are recorded as:

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

Answer 1

A

Question 2

Accountants first record transactions in the:

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

Answer 2

C

Question 3

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

Answer 3

True

Question 4

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

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

Question 5

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

Question 6

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

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

Question 7

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

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

Question 8

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

Question 9

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

Question 10

Which of the following accounts is a liability?

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

Question 11

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 12

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 13

A journal is a chronological record of transactions.

Question 14

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

Question 15

Which of the following accounts is an asset?

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

Question 16

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

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

Question 17

Which of the following are accrued liabilities?

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

Question 18

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

Question 19

Which of the following accounts is an asset?

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

Question 20

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

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

Question 21

An asset account is increased by a debit.

Question 22

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

Question 23

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

Question 24

Which of the following accounts decreases with a debit?

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

Question 25

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

Question 26

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

Question 27

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

Question 28

A liability account is increased by a debit.

Question 29

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

Question 30

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 31

A journal entry includes BOTH debit and credit amounts.

Question 32

Which of the following accounts increases with a credit?

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

Question 33

Which of the following accounts decreases with a credit?

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

Question 34

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

Question 35

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

Question 36

For assets and expenses, a debit increases the account.

Question 37

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

Question 38

For liabilities and revenues, a debit increases the account.

Question 39

A book holding all of the accounts is called the:

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

Question 40

Which of the following accounts increases with a debit?

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

Question 41

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 42

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 43

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

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

Question 44

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 45

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 46

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 47

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 48

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 49

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 50

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 51

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 52

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 53

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 54

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 55

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 56

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 57

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 58

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 59

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 60

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 61

A business pays $500 cash for supplies. Which account is credited?

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

Question 62

A business purchased $200 of supplies on account and recorded the following journal entry: Which of the following sets of ledger accounts reflect the posting of this transaction?

A)

B)

C)

D)

Question 63

A business pays $500 cash for supplies. Which account is debited?

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

Question 64

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 65

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 66

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 67

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 68

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 69

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

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

Question 70

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.

Question 71

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 72

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

Question 73

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

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

Question 74

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 75

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 76

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

Question 77

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

Question 78

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

Question 79

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 80

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