Question 1

Note payable, accounts payable, and salary payable are all examples of:

Accepted Answer

A)  expenses 
B)  assets 
C)  revenue 
D)  liabilities

Question 2

A transaction involving the cash purchase of equipment will decrease one asset account and increase another asset account.

Accepted Answer

A) True 
 B)False

Question 3

The payment of an amount owed to a creditor would:

Accepted Answer

A)  increase assets 
B)  decrease net income 
C)  decrease liabilities 
D)  increase liabilities

Question 4

A balance sheet is organized in order of the accounting equation, with liabilities first, followed by assets and shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 5

Which element of an accounting system provides information about the balance in each account?

Accepted Answer

A)  cash flow statement 
B)  journals 
C)  ledgers 
D)  source documents

Question 6

The purchase of office equipment on account would increase an asset and decrease a liability account.

Accepted Answer

A) True 
 B)False

Question 7

A trial balance is a useful device because it provides a check on accuracy by showing whether:

Accepted Answer

A)  total revenues equal total expenses 
B)  total of all the income statement accounts equals the total of all the balance sheet accounts 
C)  total debits equal total credits 
D)  total assets equal total liabilities

Question 8

Which of the following accounts normally has a debit balance?

Accepted Answer

A)  Retained Earnings 
B)  Dividends 
C)  Revenue 
D)  Share capital

Question 9

The purchase of office furniture on account (that is, on credit) would include a:

Accepted Answer

A)  credit to Office Furniture 
B)  credit to Accounts Payable 
C)  debit to Accounts Receivable 
D)  credit to Cash

Question 10

Moving data to the ledger is known as journalizing.

Accepted Answer

A) True 
 B)False

Question 11

Borrowing money from the bank by signing a note payable would:

Accepted Answer

A)  decrease liabilities 
B)  increase shareholders' equity 
C)  increase net income 
D)  have no effect on shareholders' equity

Question 12

All of the following accounts would be considered assets except for:

Accepted Answer

A)  Common Shares 
B)  Notes Receivable 
C)  Cash 
D)  Prepaid Expenses

Question 13

Receiving a payment from a customer on account would:

Accepted Answer

A)  increase liabilities 
B)  have no effect on shareholders' equity 
C)  increase shareholders' equity 
D)  increase net income

Question 14

The payment of salaries to employees when earned would:

Accepted Answer

A)  increase assets 
B)  decrease shareholders' equity 
C)  increase liabilities 
D)  increase net income

Question 15

A business purchases a truck by signing a note payable to the seller. Such a transaction would include a:

Accepted Answer

A)  debit to Note Payable 
B)  credit to Note Payable 
C)  debit to an expense account 
D)  credit to Truck

Question 16

The payment of expenses should be recorded with a credit to:

Accepted Answer

A)  Common shares 
B)  Cash 
C)  Dividends 
D)  Accounts Receivable

Question 17

Dividends paid to the shareholders when declared will:

Accepted Answer

A)  increase assets and decrease liabilities 
B)  decrease assets and increase liabilities 
C)  decrease assets and decrease shareholders' equity 
D)  have no effect on shareholders' equity

Question 18

The payment for rent of the office building for one month would include a:

Accepted Answer

A)  debit to Cash 
B)  credit to Revenue 
C)  debit to Rent Expense 
D)  credit to Accounts Payable

Question 19

Accounts payable normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 20

The ledger provides a good indication of how much cash is available for the business to use.

Accepted Answer

A) True 
 B)False

Exam 2: Recording Business Transactions

Note payable, accounts payable, and salary payable are all examples of:

A transaction involving the cash purchase of equipment will decrease one asset account and increase another asset account.

The payment of an amount owed to a creditor would:

A balance sheet is organized in order of the accounting equation, with liabilities first, followed by assets and shareholders' equity.

Which element of an accounting system provides information about the balance in each account?

The purchase of office equipment on account would increase an asset and decrease a liability account.

A trial balance is a useful device because it provides a check on accuracy by showing whether:

Which of the following accounts normally has a debit balance?

The purchase of office furniture on account (that is, on credit) would include a:

Moving data to the ledger is known as journalizing.

Borrowing money from the bank by signing a note payable would:

All of the following accounts would be considered assets except for:

Receiving a payment from a customer on account would:

The payment of salaries to employees when earned would:

A business purchases a truck by signing a note payable to the seller. Such a transaction would include a:

The payment of expenses should be recorded with a credit to:

Dividends paid to the shareholders when declared will:

The payment for rent of the office building for one month would include a:

Accounts payable normally has a debit balance.

The ledger provides a good indication of how much cash is available for the business to use.