Question 1

The business provided services for cash. To record this:

Accepted Answer

A)  an asset is credited and a liability is credited. 
B)  an asset is credited and a revenue is credited. 
C)  an expense is debited and Capital is credited. 
D)  None of the above answers are correct.

Question 2

The rules of debit and credit require increases to be posted to the:

Accepted Answer

A)  debit side. 
B)  credit side. 
C)  normal balance. 
D)  None of these answers is correct.

Question 3

What would be the effect on the accounts if the business provided services to a credit customer?

Accepted Answer

A)  An asset would be debited and an expense debited. 
B)  Capital would be credited and Revenue credited. 
C)  An asset would be debited and Revenue credited. 
D)  An asset would be debited and Capital credited.

Question 4

Which of the following groups of accounts have a normal debit balance?

Accepted Answer

A)  Revenue, liabilities, and expenses 
B)  Assets, capital, and withdrawals 
C)  Liabilities, expenses, and assets 
D)  Assets, expenses, and withdrawals

Question 5

A credit may signify a(n):

Accepted Answer

A)  increase in assets. 
B)  decrease in liabilities. 
C)  increase in revenue. 
D)  increase in withdrawals.

Question 6

Susan flew to San Francisco on a business trip that will be reimbursed by her employer. The purchase price of the ticket was $800 and it was bought on account. The entry to record the transaction is:

Accepted Answer

A)  debit Accounts Payable, $800; credit Travel Expense, $800. 
B)  debit Capital, $800; credit Accounts Payable, $800. 
C)  debit Travel Expense, $800; credit Accounts Payable, $800. 
D)  debit Travel Expense, $800; credit Cash, $800.

Question 7

A multi-step income statement:

Accepted Answer

A)  shows debits. 
B)  shows credits. 
C)  shows debt owed. 
D)  shows subtotal amounts.

Question 8

Excel Home bought painting equipment on account for $5,000. The entry would include:

Accepted Answer

A)  debit to Supplies Expense, $5,000; credit to Cash, $5,000. 
B)  debit to Equipment, $5,000; credit to Cash, $5,000. 
C)  debit to Equipment, $5,000; credit to Accounts Payable, $5,000. 
D)  debit to Supplies Expense, $5,000; credit to Accounts Payable, $5,000.

Question 9

What would be the effect on the accounts if the owner invested cash into the business?

Accepted Answer

A)  An asset would be debited and Capital credited. 
B)  Withdrawals would be debited and an asset credited. 
C)  An asset would be debited and a revenue credited. 
D)  A Revenue would be debited and Capital credited.

Question 10

Accounts Payable indicates amounts owed.

Accepted Answer

A) True 
 B)False

Question 11

Determine the ending owner's equity of a business having a beginning owner's equity of $8,500, additional investments of $600, withdrawals of $1,000, and net income of $1,200.
$ ________

Accepted Answer

The answer of Determine the ending owner's equity of a...

Question 12

In accrual basis accounting, revenues are recorded when earned.

Accepted Answer

A) True 
 B)False

Question 13

The following is a list of accounts and their balances for Myra's Company for the month ended May 31, 20xx. Prepare a trial balance in good form.

Accepted Answer

The answer of The following is a list of accounts...

Question 14

A debit to an asset account was posted as a debit to an expense account. This error would cause:

Accepted Answer

A)  liabilities to be overstated. 
B)  expenses to be overstated. 
C)  assets to be understated. 
D)  Both B and C are correct.

Question 15

The beginning balance in the Equipment account was $4,000. The company purchased an additional $1,000 worth of Equipment. The ending balance in the account is:

Accepted Answer

A)  debit of $3,000. 
B)  credit of $4,000. 
C)  debit of $5,000. 
D)  credit of $3,000.

Question 16

What would be the effect on the accounts if the business received the telephone bill but did not pay it immediately?

Accepted Answer

A)  An expense would be debited and an asset credited. 
B)  Capital would be debited and Revenue credited. 
C)  An expense would be debited and a liability credited. 
D)  An asset would be debited and Capital credited.

Question 17

The debit side of all accounts decreases the account balance and the credit side of all accounts increases the account balance.

Accepted Answer

A) True 
 B)False

Question 18

An accounting tool used to record increases and decreases in individual Assets, Liabilities, Capital, Revenue, Expenses, and Owner's Drawing is a(n):

Accepted Answer

A)  chart of accounts. 
B)  account. 
C)  trial balance. 
D)  footing.

Question 19

The ledger is:

Accepted Answer

A)  a group of accounts that records results from business transactions. 
B)  a tool used to ensure that all accounts have normal balances. 
C)  a chronological record of the day's transactions. 
D)  a tool used to ensure that debits equal credits.

Question 20

The chart of accounts:

Accepted Answer

A)  is a numbered list of all of the business's accounts. 
B)  allows accounts to be located quickly. 
C)  can be expanded as the business grows. 
D)  All of the above are correct.

Exam 2: Debits and Credits: Analyzing and Recording Business Transactions

The business provided services for cash. To record this:

The rules of debit and credit require increases to be posted to the:

What would be the effect on the accounts if the business provided services to a credit customer?

Which of the following groups of accounts have a normal debit balance?

A credit may signify a(n) :

Susan flew to San Francisco on a business trip that will be reimbursed by her employer. The purchase price of the ticket was $800 and it was bought on account. The entry to record the transaction is:

A multi-step income statement:

Excel Home bought painting equipment on account for $5,000. The entry would include:

What would be the effect on the accounts if the owner invested cash into the business?

Accounts Payable indicates amounts owed.

Determine the ending owner's equity of a business having a beginning owner's equity of $8,500, additional investments of $600, withdrawals of $1,000, and net income of $1,200. $ ________

In accrual basis accounting, revenues are recorded when earned.

The following is a list of accounts and their balances for Myra's Company for the month ended May 31, 20xx. Prepare a trial balance in good form.

A debit to an asset account was posted as a debit to an expense account. This error would cause:

The beginning balance in the Equipment account was $4,000. The company purchased an additional $1,000 worth of Equipment. The ending balance in the account is:

What would be the effect on the accounts if the business received the telephone bill but did not pay it immediately?

The debit side of all accounts decreases the account balance and the credit side of all accounts increases the account balance.

An accounting tool used to record increases and decreases in individual Assets, Liabilities, Capital, Revenue, Expenses, and Owner's Drawing is a(n) :

The ledger is:

The chart of accounts: