Deck 2: Analyzing Transactions

Question 1

Accounts payable are accounts that you expect will be paid to you.

Answer 1

False

Question 2

An account has three parts to it; a title, an increase side, and a decrease side.

Answer 2

True

Question 3

Consuming goods and services in the process of generating revenues results in expenses.

Answer 3

True

Question 4

Debiting the cash account will increase the account.

Question 5

The dividends account is an example of an expense.

Question 6

Prepaid expenses are an example of an expense.

Question 7

The recording of cash receipts to the cash account will be done by debiting the account.

Question 8

The chart of accounts should be the same for each business.

Question 9

The unearned revenues account is an example of a liability.

Question 10

The T account got its name because it resembles the letter "T."

Question 11

To determine the balance in an account, always subtract credits from debits.

Question 12

A chart of accounts is a listing of accounts that make up the journal.

Question 13

Depending on the account title, the right side of the account is referred to as the credit side.

Question 14

A debit is abbreviated as Db and a credit is abbreviated as Cr.

Question 15

The right hand side of a T account is known as a debit and the left hand side is known as a credit.

Question 16

The recording of cash payments from the cash account is done by entering the amount as a credit.

Question 17

A credit to the cash account will increase the account.

Question 18

The cash account will always be debited.

Question 19

Accounts in the ledger are usually maintained in alphabetical order.

Question 20

Accounts are records of increases and decreases in individual financial statement items.

Question 21

The increase side of all accounts is the normal balance.

Question 22

Liabilities are debts owed by the business entity.

Question 23

Expenses use up assets or consume services in the process of generating revenues.

Question 24

Transactions are listed in the journal chronologically.

Question 25

Expense accounts are increased by credits.

Question 26

Revenues are equal to the difference between cash receipts and cash payments.

Question 27

The process of recording a transaction in the journal is called journalizing.

Question 28

Liability accounts are increased by debits.

Question 29

When an account receivable is collected in cash, the total assets of the business increase.

Question 30

A dividends account records amounts paid to stockholders.

Question 31

The double-entry accounting system records each transaction twice.

Question 32

The balance of the account can be determined by adding all of the debits, adding all of the credits, and adding the amounts together.

Question 33

The accounts payable account is listed in the chart of accounts as an asset.

Question 34

Transactions are initially entered into a record called a journal.

Question 35

Journalizing eliminates fraud.

Question 36

When an accounts payable account is paid in cash, company expenses increase.

Question 37

When a company issues new shares of stock, the capital stock account increases due to revenue being earned.

Question 38

Retained earnings will be reduced by the amount in the dividends account.

Question 39

Journalizing transactions using the double-entry bookkeeping system will eliminate fraud.

Question 40

Journalizing is the process of entering amounts in the ledger.

Question 41

Normal balances appear on the side that increases the account balance.

Question 42

Liabilities are increased with debits and decreased with credits.

Question 43

Assets are increased with debits and decreased with credits.

Question 44

A transaction that is recorded in the journal is called a journal entry.

Question 45

When a business receives a bill from the utility company, no entry should be made until the invoice is paid.

Question 46

The post reference notation used in the journal is the page number.

Question 47

The journal includes both debit and credit accounts for each transaction.

Question 48

Journal entries can have more than two accounts as long as the debits equal the credits.

Question 49

All stockholders' equity accounts record increases to the accounts with credits.

Question 50

The normal balance of an expense account is a credit.

Question 51

The normal balance of a capital stock account is a debit.

Question 52

For a month's transactions for a typical medium-sized business, the accounts payable account is likely to have only credit entries.

Question 53

Dividends decrease retained earnings and are listed on the income statement as a deduction from revenue.

Question 54

The post reference notation used in the ledger is the account number.

Question 55

The normal balance of the dividends account is a debit.

Question 56

The normal balance of revenue accounts is a credit.

Question 57

The process of transferring the data from the journal to the ledger accounts is posting.

Question 58

Debits will increase Unearned Revenues and Revenues.

Question 59

For a month's transactions for a typical medium-sized business, the salary expense account is likely to have only credit entries.

Question 60

Revenue accounts are increased by credits.

Question 61

The erroneous moving of an entire number one or more spaces to the right or left, such as writing $85 as $850, is called a transposition.

Question 62

Even when a trial balance is in balance, there may be errors in the individual accounts.

Question 63

Accounts are classified in the ledger

A) chronologically
B) alphabetically
C) in accordance with their appearance in the financial statements
D) so that accounts used most often are listed first

Question 64

If the trial balance is in balance, it can be assumed that all journal entries were posted correctly and no errors were made.

Question 65

A trial balance determines the accuracy of the numbers.

Question 66

The totals at the bottom of the trial balance and the totals at the bottom of the balance sheet both show equality and balancing, and therefore should be equal.

Question 67

Posting a part of a transaction to the wrong account will cause the trial balance totals to be unequal.

Question 68

The erroneous arrangement of digits, such as writing $45 as $54, is called a slide.

Question 69

A notation in the post reference column of the general journal indicates that the amount has been posted to the ledger.

Question 70

A group of related accounts that make up a complete unit is called a trial balance.

Question 71

The process of transferring the debits and credits from the journal entries to the accounts is known as "updating the accounts".

Question 72

The order of the flow of accounting data is (1) record in the ledger, (2) record in the journal, (3) prepare the financial statements.

Question 73

A proof of the equality of debits and credits in the ledger at the end of an accounting period is called a balance sheet.

Question 74

The gross increases in retained earnings attributable to business activities are called

A) assets
B) liabilities
C) revenues
D) net income

Question 75

Which of the following accounts is a stockholders' equity account?

A) Cash
B) Accounts Payable
C) Prepaid Insurance
D) Dividends

Question 76

Posting a transaction twice will cause the trial balance totals to be equal.

Question 77

Revenue should be recognized when

A) cash is received
B) the service is performed
C) the customer places an order
D) the customer charges an order

Question 78

Journalizing a transaction with both the debit and the credit for $69 instead of $96 will cause the trial balance to be out of balance.

Question 79

Once journal entries are posted to accounts, each account will show a new balance after each entry.

Question 80

Accounts

A) do not reflect money amounts
B) are not used by entities that manufacture products
C) are records of increases and decreases in individual financial statement items
D) are only used by large entities with many transactions