Question 1

Which of the following is NOT an example of a source document?

Accepted Answer

A) Journal 
B) Bank deposit slip 
C) Sales invoice 
D) Purchase invoice

Question 2

A business collects cash from a customer in payment of accounts receivable. Which account is credited?

Accepted Answer

A) Accounts receivable 
B) Supplies 
C) Cash 
D) Service revenue

Question 3

A business makes a cash payment of $12 000 to an account payable. Which account is debited?

Accepted Answer

A) Service revenue 
B) Cash 
C) Accounts receivable 
D) Accounts payable

Question 4

A journal entry for a $250 payment to purchase supplies was erroneously recorded as a debit to Supplies for $520 and a credit to Cash for $250. Which of the following statements about the trial balance is TRUE?

Accepted Answer

A) The sum of the debits will exceed the sum of the credits by $250. 
B) The sum of the debits will exceed the sum of the credits by $270. 
C) The sum of the credits will exceed the sum of the debits by $270. 
D) The trial balance will be in balance; the sum of the credits will equal the sum of the debits.

Question 5

Which of the following accounts increases with a credit?

Accepted Answer

A) Accounts receivable 
B) Prepaid expenses 
C) Cash 
D) Capital

Question 6

An account is the detailed record of the changes in a particular asset, liability, or owners' equity.

Accepted Answer

A) True 
 B)False

Question 7

A business renders services to a customer for $16 000 on credit. Which account is credited?

Accepted Answer

A) Accounts receivable 
B) Cash 
C) Accounts payable 
D) Service revenue

Question 8

An asset account is increased by a debit.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following accounts is an owners' equity account?

Accepted Answer

A) Accrued liability 
B) Prepaid expense 
C) Capital 
D) Accounts payable

Question 10

Which of the following accounts is an example of a liability?

Accepted Answer

A) Bills payable 
B) Service revenue 
C) Building 
D) Accounts receivable

Question 11

The following entries were made by the accountant of Patel Pastries during its first month of operation. 1. James Patel, the owner, deposited $3 000 in the business new bank account.
2. Patel Pastries paid the first month's rent of $400 in cash.
3. Patel Pastries purchased equipment by borrowing $11 000.
4. Cash sales for the month were $4 500.
5. Patel Pastries purchased cooking supplies for $1 400 cash.
After the accountant posts these entries to the general ledger, how much are total assets?

Accepted Answer

A) $7 100 
B) $16 700 
C) $18 100 
D) $6 100

Question 12

A business renders service to a client and sends out a sales invoice. The amount will be collected from the customer at a later time. Which of the following would be TRUE at the time when the invoice is sent out?

Accepted Answer

A) Total liabilities will increase. 
B) Owners' equity will decrease. 
C) Profit will increase. 
D) Total assets will decrease.

Question 13

Which of the following is a method used to detect errors when the two columns of the trial balance are NOT equal?

Accepted Answer

A) Calculate the difference in the columns, divide the difference between total debits and total credits by 2 and search for a debit shown as a credit, or vice versa. 
B) Calculate the difference in the columns and search the trial balance for a transposition error or a slide error if the difference is evenly divisible by 9. 
C) Calculate the difference in the columns and search for a missing account with that balance. 
D) All of the above are suggested methods for detecting errors.

Question 14

A journal entry for a $75 payment for Rent expense was posted as a debit to Salary expense and a credit to Cash. This error will cause which of the following conditions on the trial balance?

Accepted Answer

A) The sum of the credits will exceed the sum of the debits by $150. 
B) The sum of the debits will exceed the sum of the credits by $75. 
C) The sum of the credits will equal the sum of the debits. 
D) The sum of the debits will exceed the sum of the credits by $150.

Question 15

In a trial balance, total debits are always equal to total credits.

Accepted Answer

A) True 
 B)False

Question 16

A business renders services to a customer for $16 000 on credit. Which account is debited?

Accepted Answer

A) Service revenue 
B) Accounts payable 
C) Cash 
D) Accounts receivable

Question 17

Which of the following statements CORRECTLY describes a trial balance?

Accepted Answer

A) A trial balance is a list of all accounts with their balances. 
B) A trial balance is the first step in the accounting cycle. 
C) A trial balance is also known as a balance sheet. 
D) A trial balance is also known as the chart of accounts.

Question 18

When a business collects cash, the cash account is always debited.

Accepted Answer

A) True 
 B)False

Question 19

The trial balance is one of the three basic financial statements.

Accepted Answer

A) True 
 B)False

Question 20

For Revenues, the category of account and its normal balance are:

Accepted Answer

A) Owners' equity and a credit balance. 
B) Liabilities and a credit balance. 
C) Assets and a debit balance. 
D) Owners' equity and a debit balance.

Exam 2: Recording Business Transactions

Which of the following is NOT an example of a source document?

A business collects cash from a customer in payment of accounts receivable. Which account is credited?

A business makes a cash payment of $12 000 to an account payable. Which account is debited?

A journal entry for a $250 payment to purchase supplies was erroneously recorded as a debit to Supplies for $520 and a credit to Cash for $250. Which of the following statements about the trial balance is TRUE?

Which of the following accounts increases with a credit?

An account is the detailed record of the changes in a particular asset, liability, or owners' equity.

A business renders services to a customer for $16 000 on credit. Which account is credited?

An asset account is increased by a debit.

Which of the following accounts is an owners' equity account?

Which of the following accounts is an example of a liability?

A business renders service to a client and sends out a sales invoice. The amount will be collected from the customer at a later time. Which of the following would be TRUE at the time when the invoice is sent out?

Which of the following is a method used to detect errors when the two columns of the trial balance are NOT equal?

A journal entry for a $75 payment for Rent expense was posted as a debit to Salary expense and a credit to Cash. This error will cause which of the following conditions on the trial balance?

In a trial balance, total debits are always equal to total credits.

A business renders services to a customer for $16 000 on credit. Which account is debited?

Which of the following statements CORRECTLY describes a trial balance?

When a business collects cash, the cash account is always debited.

The trial balance is one of the three basic financial statements.

For Revenues, the category of account and its normal balance are: