Question 1

A summary of the ledger that lists the accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n):

Accepted Answer

A) Account balance. 
B) Chart of accounts. 
C) Trial balance. 
D) Ledger. 
E) General Journal.

Question 2

While in the process of posting from the journal to the ledger, the accountant of X Company failed to post a $50 debit to the Office Supplies account. The effect of this error will be as follows:

Accepted Answer

A) The total debits in the trial balance will be larger than the total credits. 
B) The error will overstate the debits listed in the journal. 
C) The trial balance will not balance. 
D) The Office Supplies account balance will be overstated. 
E) This error will not make any difference.

Question 3

An account balance is the difference between the increases and decreases recorded in an account.

Accepted Answer

A) True 
 B)False

Question 4

An abnormal balance in an account refers to a balance on the side where decreases are recorded.

Accepted Answer

A) True 
 B)False

Question 5

Double-entry accounting is

Accepted Answer

A) An accounting system that records the effects of transactions and other events in at least two accounts with equal debits and credits. 
B) An accounting system that disregards the accounting equation, A = L + E. 
C) An accounting system in which errors never occur. 
D) An accounting system in which the sum of the debit account balances never equals the sum of the credit account balances. 
E) An accounting system in which each transaction affects and is recorded in two or more accounts with unequal debits and equal credits.

Question 6

An asset created by a payment for economic benefits that does not expire until some later time is:

Accepted Answer

A) Recorded as a debit to an unearned revenue account. 
B) Recorded as a credit to a prepaid expense account. 
C) Recorded as a credit to an unearned revenue account. 
D) Recorded as a debit to a prepaid expense account. 
E) Not recorded in the accounting records.

Question 7

Explain the difference between a ledger and a chart of accounts

Accepted Answer

The answer of Explain the difference between a ledger and...

Question 8

A credit purchase of a business expense item should be recorded with a debit to an expense account and a credit to Accounts Payable.

Accepted Answer

A) True 
 B)False

Question 9

Goods sold on credit to customers are called accounts payable

Accepted Answer

A) True 
 B)False

Question 10

A book of original entry is

Accepted Answer

A) A book in which amounts are posted from a journal. 
B) Also called a ledger. 
C) Another name for the general journal. 
D) Another name for the cash account. 
E) Sometimes called a book of final entry.

Question 11

Increases in liabilities are recorded as debits

Accepted Answer

A) True 
 B)False

Question 12

Prepaid Insurance is an expense account which is used for recording expenses that havebeen paid in advance.

Accepted Answer

A) True 
 B)False

Question 13

The first step in the accounting cycle is transaction analysis

Accepted Answer

A) True 
 B)False

Question 14

On March 2, 2015, Lang Company provided snow removal services to a customer for$1,000 cash. What is the impact of this transaction on the net assets of Lang?

Accepted Answer

A) No impact. 
B) Increase of $2,000. 
C) Increase of $1,000. 
D) Decrease of $2,000. 
E) Decrease of $1,000.

Question 15

A ledger is a type of account

Accepted Answer

A) True 
 B)False

Question 16

The left side of a T-account is always the credit side, while the right side is always the debit side.

Accepted Answer

A) True 
 B)False

Question 17

A $130 credit to Office Equipment was credited to Sales by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Accepted Answer

A) Office Equipment, overstated $260; Sales, understated $130. 
B) Office Equipment, understated $130; Sales, overstated $130. 
C) Office Equipment, overstated $130; Sales, understated $130. 
D) Office Equipment, understated $260; Sales, overstated $130. 
E) Office Equipment, overstated $130; Sales, overstated $130.

Question 18

Prepaid expenses are

Accepted Answer

A) Always debited to an expense account. 
B) Payments made for economic benefits that never expire. 
C) Generally all combined into one account called "Miscellaneous Expenses". 
D) Classified as liabilities on the balance sheet. 
E) Assets created by payments for economic benefits that are not used up until later.

Question 19

The following transactions occurred during July for Hurley Services:(1)Received $800 cash for photography services provided to customer during the month.(2)Received $500 cash from Barbara Blanc, the owner of the business.(3)Received $300 from a customer in partial payment of his account receivable which arose as a result of sales during June.(4)Rendered photography services to a customer on credit, $1,500Borrowed $800 from the bank by signing a promissory note.(6)Received $500 from a customer in payment for services to be rendered next year.How much revenue was earned in July?

Accepted Answer

A) $1,200. 
B) $2,300. 
C) $2,800. 
D) $7,000. 
E) $5,500.

Question 20

Withdrawals are a type of transaction that affects equity

Accepted Answer

A) True 
 B)False

Exam 2: Analyzing and Recording Transactions

A summary of the ledger that lists the accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n) :

While in the process of posting from the journal to the ledger, the accountant of X Company failed to post a $50 debit to the Office Supplies account. The effect of this error will be as follows:

An account balance is the difference between the increases and decreases recorded in an account.

An abnormal balance in an account refers to a balance on the side where decreases are recorded.

Double-entry accounting is

An asset created by a payment for economic benefits that does not expire until some later time is:

Explain the difference between a ledger and a chart of accounts

A credit purchase of a business expense item should be recorded with a debit to an expense account and a credit to Accounts Payable.

Goods sold on credit to customers are called accounts payable

A book of original entry is

Increases in liabilities are recorded as debits

Prepaid Insurance is an expense account which is used for recording expenses that havebeen paid in advance.

The first step in the accounting cycle is transaction analysis

On March 2, 2015, Lang Company provided snow removal services to a customer for$1,000 cash. What is the impact of this transaction on the net assets of Lang?

A ledger is a type of account

The left side of a T-account is always the credit side, while the right side is always the debit side.

A $130 credit to Office Equipment was credited to Sales by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Prepaid expenses are

Withdrawals are a type of transaction that affects equity