Deck 2: Analyzing Transactions

Question 1

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

Answer 1

False

Question 2

Transactions are initially entered into a record called a journal.

Answer 2

True

Question 3

Prepaid expenses are an example of an expense.

Answer 3

False

Question 4

Transactions are listed in the journal chronologically.

Question 5

Expense accounts are increased by credits.

Question 6

Liability accounts are increased by debits.

Question 7

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

Question 8

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

Question 9

The increase side of all accounts is the normal balance.

Question 10

The double-entry accounting system records each transaction twice.

Question 11

Unearned Revenues account is an example of a liability.

Question 12

The Drawings account is an example of an expense.

Question 13

Accounts in the ledger are usually maintained in alphabetical order.

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

Journalizing is the process of entering amounts in the ledger.

Question 21

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

Question 22

Withdrawals decrease owner's equity and are listed on the income statement as a deduction from revenue.

Question 23

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

Question 24

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

Question 25

Revenue accounts are increased by credits.

Question 26

The cash account will always be debited.

Question 27

A credit to the cash account will increase the account.

Question 28

When an owner contributes equipment to the business, he or she retains ownership of the property.

Question 29

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

Question 30

The normal balance of revenue accounts is a credit.

Question 31

The normal balance of a capital account is a debit.

Question 32

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

Question 33

The normal balance of an expense account is a credit.

Question 34

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 35

Debiting the cash account will increase the account.

Question 36

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

Question 37

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

Question 38

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

Question 39

The normal balance of the drawing account is a debit.

Question 40

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

Question 41

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

Question 42

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

Question 43

A drawing account represents the amount of withdrawals made by the owner.

Question 44

Liabilities are increased with debits and decreased with credits.

Question 45

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

Question 46

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

Question 47

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

Question 48

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

Question 49

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

Question 50

Owner's capital will be reduced by the amount in the drawing account.

Question 51

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

Question 52

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

Question 53

Normal balances are the side that increase the account balance.

Question 54

Debits will increase Unearned Revenues and Revenues.

Question 55

When an accounts payable account is paid in cash, the owner's equity in the business decreases.

Question 56

Assets are increased with debits and decreased with credits.

Question 57

When an owner invests assets in the business, the capital account increases due to revenue being earned.

Question 58

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

Question 59

Liabilities are debts owed by the business entity.

Question 60

All owner's equity accounts record increases to the accounts with credits.

Question 61

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 62

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

Question 63

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

Question 64

Journalizing eliminates fraud.

Question 65

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

A) Cash
B) Accounts Payable
C) Prepaid Insurance
D) Ross Morris, Capital

Question 66

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

Question 67

Revenue should be recognized when

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

Question 68

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

Question 69

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

Question 70

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

Question 71

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 72

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 73

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

Question 74

A trial balance determines the accuracy of the numbers.

Question 75

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

Question 76

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 77

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

Question 78

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

Question 79

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 80

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.