Deck 2: Analyzing and Recording Business Transactions

Question 1

The Liabilities section would include accrued liabilities and prepaid expense accounts.

Answer 1

False

Question 2

A business generally has just one expense account.

Answer 2

False

Question 3

Items such as salaries and interest that have been incurred, but not yet paid, are called:

A)accrued assets.
B)accrued liabilities.
C)accrued revenues.
D)accrued notes.

Answer 3

accrued liabilities.

Question 4

Items of value that a company owns are called Stockholders' Equity.

Question 5

A business generally has fewer liability accounts than asset accounts.

Question 6

An account starting with a number 1 would indicate:

A)an asset.
B)Stockholders' Equity.
C)a revenue.
D)a liability.

Question 7

Expenses paid in advance such as rent and insurance are classified as prepaid expenses. Into what category are they placed?

A)Liabilities
B)Revenues
C)Expenses
D)Assets

Question 8

The order in which accounts appear in the chart of accounts is:

A)liabilities, assets, revenues, Stockholders' Equity, expenses.
B)Stockholders' Equity, expenses, revenue, liabilities, assets.
C)assets, Stockholders' Equity, revenues, expenses, liabilities.
D)Assets, Liabilities, Stockholders' Equity, revenues, expenses.

Question 9

The Stockholders' Equity section would include accounts such as Retained Earnings and Revenues.

Question 10

The Assets section would include prepaid expense accounts.

Question 11

Obligations that are owed to others due to past transactions are categorized as:

A)Stockholders' Equity.
B)expenses.
C)assets.
D)liabilities.

Question 12

Account titles such as Salaries Expense and Rent Expense would be numbered starting with a 3.

Question 13

Accounts that start with the numbers 6-9 would probably be:

A)other revenues and expenses.
B)other assets and liabilities.
C)other Stockholders' Equity.
D)other assets and revenues.

Question 14

Dividends are paid with cash to shareholders. Dividends are in what category of the chart of accounts?

A)Revenue
B)Assets
C)Stockholders' Equity
D)Liabilities

Question 15

A type of asset in which a customer owes the company money would be a:

A)dividend.
B)receivable.
C)payable.
D)sale.

Question 16

Accounts Payable represent amounts a business must pay because it signed a written promissory note.

Question 17

An account numbered 321 would be considered a Stockholders' Equity account as it begins with a 3.

Question 18

All payables are listed as:

A)assets.
B)liabilities.
C)Stockholders' Equity.
D)revenue.

Question 19

Accounts starting with the number 4 would represent:

A)assets.
B)liabilities.
C)revenues.
D)expenses.

Question 20

The ___________ account tracks a company's cumulative earnings less dividends.

A)Retained Earnings
B)Cash
C)Common Stock
D)Revenues

Question 21

Land, Cash, Office Equipment and Accounts Receivable belong to what category of accounts?

A)Liabilities
B)Revenues
C)Expenses
D)Assets

Question 22

How does an account receivable differ from a note receivable?

A)A note receivable is an asset while an account receivable is not.
B)An account receivable is a written pledge while a note receivable is not.
C)An account receivable is always an amount due from the company's customers while a note receivable is always an amount due from a bank.
D)Notes receivable are written pledges while Accounts Receivable are not.

Question 23

Which is NOT a part of Stockholders' Equity?

A)Revenues
B)Expenses
C)Accounts Receivable
D)Dividends

Question 24

Which of the following is TRUE regarding the accounts supplies payable and supplies expense?

A)These account titles both mean the same thing and are used interchangeably.
B)Supplies payable represents the cost of supplies bought on account but not yet paid for, while supplies expense represents the cost of the supplies which have been paid for.
C)Supplies payable represents the cost of supplies bought on account but not yet paid for, while supplies expense represents the cost of supplies used to deliver goods or services to customers.
D)Supplies expense represents the cost of supplies bought on account but not yet paid for, while supplies payable represents the cost of supplies used to deliver goods or services to customers.

Question 25

Double-entry accounting requires that every business transaction impact at least two different accounts.

Question 26

Which of the following is NOT a revenue account?

A)Salaries
B)Sales
C)Fees Earned
D)Professional Fees

Question 27

Obligations owed by a company to banks, for instance, are called:

A)Notes Receivable.
B)Notes Payable.
C)Accounts Receivable.
D)Accounts Payable.

Question 28

Collection of money from a cash customer represents a(n):

A)liability.
B)expense.
C)revenue.
D)stock.

Question 29

Which of the following is NOT a liability?

A)Accounts Payable
B)Interest Payable
C)Rent Expense
D)All of the above are liabilities.

Question 30

Dividends, revenues, and Expenses all:

A)start with the same chart of account number.
B)start with different chart of accounts numbers.
C)appear in the chart of accounts under assets.
D)appear in the chart of accounts under liabilities.

Question 31

Marketing expenditures account 511 would belong to what category of accounts?

A)Assets
B)Expenses
C)Revenues
D)Liabilities

Question 32

A T-account is a way to visualize the increases and decreases to the value of an account.

Question 33

Which of the following would start with a 2 in the chart of accounts?

A)Accounts Payable and Interest Payable
B)Common Stock and Dividends
C)Cash and Accounts Receivable
D)Sales and Service Revenue

Question 34

Net income and dividends are part of:

A)Revenues.
B)Stockholders' Equity.
C)Assets.
D)Liabilities.

Question 35

A chart of accounts does NOT include:

A)Stockholders' Equity.
B)assets.
C)names of customers.
D)liabilities.

Question 36

A promissory note owed to another company would most likely appear in which of the following accounts?

A)Accounts Receivable
B)Accounts Payable
C)Notes Receivable
D)Notes Payable

Question 37

The account used to record payment of a telephone bill immediately after receiving it, would be a(n):

A)asset.
B)liability.
C)revenue.
D)expense.

Question 38

Which of the following is NOT an asset?

A)Revenues
B)Accounts Receivable
C)Prepaid Rent
D)All of the above are assets.

Question 39

Which of the following is an expense account?

A)Prepaid Insurance
B)Advertising
C)Accounts Payable
D)Cash

Question 40

Which of the following would start with a 1 in the chart of accounts?

A)Receivables and Equipment
B)Depreciation Expense and Marketing Expense
C)Merchandise Sales and Rent Revenue
D)Common Stock and Dividends

Question 41

A T-account has a $426 debit balance. This account is most likely:

A)Income Taxes Payable.
B)Common Stock.
C)Cash.
D)Magazine Sales.

Question 42

Accounts Payable, Taxes Payable, and Notes Payable:

A)increase on the debit side, decrease on the credit side and are assets.
B)decrease on the debit side, increase on the credit side and are liabilities.
C)increase on the debit side, decrease on the credit side and are expenses.
D)decrease on the debit side, increase on the credit side and are revenues.

Question 43

A T-account has a $864 credit balance. This account is most likely:

A)Office Equipment.
B)Rent Expense.
C)Dividends.
D)Sales Revenue.

Question 44

Office Furniture, Wages Payable and Dividends have normal balances of:

A)credit, credit, and credit, respectively.
B)debit, credit, and debit, respectively.
C)debit, debit, and credit, respectively.
D)credit, debit, and debit, respectively.

Question 45

A T-account has a $312 credit balance. This account is most likely NOT:

A)Accounts Receivable.
B)Bicycle Repair Revenue.
C)Wages Payable.
D)Common Stock.

Question 46

The Stockholders' Equity accounts Dividends, Revenues and Expenses have normal balances of:

A)credit, debit, and debit, respectively.
B)debit, credit, and credit, respectively.
C)debit, credit, and debit, respectively.
D)credit, credit, and credit, respectively.

Question 47

Revenues, Accounts Receivable, and Common Stock have normal balances of:

A)credit, debit, and credit, respectively.
B)debit, debit, and credit, respectively.
C)credit, credit, and credit, respectively.
D)debit, debit, and debit, respectively.

Question 48

Dividends, Accounts Receivable, and Buildings have normal balances of:

A)credit, debit, and debit, respectively.
B)debit, debit, and credit, respectively.
C)credit, credit, and credit, respectively.
D)debit, debit, and debit, respectively.

Question 49

Cash, Common Stock, and Advertising Expense have normal balances of:

A)credit, credit, and credit, respectively.
B)debit, credit, and debit, respectively.
C)debit, debit, and credit, respectively.
D)credit, debit, and debit, respectively.

Question 50

Debit means:

A)decrease.
B)increase.
C)the right side of an account.
D)the left side of an account.

Question 51

A T-account has a $789 debit balance. This account is most likely NOT:

A)Common Stock.
B)Land.
C)Advertising Expense.
D)Dividends.

Question 52

The credit (right)side of an account shows an increase or decrease depending upon the type of account.

Question 53

Normal balance refers to the positive increase of an account and identifies the side of the account (Debit or Credit)to which this positive balance is recorded.

Question 54

A T-account has a $698 credit balance. This account is most likely NOT:

A)Accounts Payable.
B)Sales Revenue.
C)Accounts Receivable.
D)Common Stock.

Question 55

Accounts that increase on the credit side are Assets, dividends and Expenses (ADE).

Question 56

Which of the following is an unofficial tool of accounting?

A)Account
B)T-account
C)Debit
D)Credit

Question 57

The total amount of debits must equal the total amount of credits. This is a rule of:

A)T-accounts.
B)the chart of accounts.
C)double-entry accounting.
D)normal balances.

Question 58

A T-account has a $1,250 credit balance. This account is most likely:

A)an expense.
B)a dividend account.
C)an asset.
D)a stock account.

Question 59

Accounts that increase on the credit side are Liabilities, Common Stock, Revenues and Retained Earnings (LCR).

Question 60

The debit (left)side of an account always indicates an increase in the value of the account.

Question 61

A T-account has which of the following three major parts?

A)A debit side, a credit side, and a balance
B)A debit side, a credit side, and a total column
C)A title, a current date, and a balance
D)A title, a debit side, and a credit side

Question 62

The fact that each transaction has a dual effect on the accounting equation provides the basis for what is called:

A)single-entry accounting.
B)double-entry accounting.
C)compound-entry accounting.
D)multiple-entry accounting.

Question 63

An example of accounts with normal credit balances would be:

A)revenues.
B)assets.
C)expenses.
D)dividends.

Question 64

A company has a $4568 debit balance in its cash account. Given this information, which of the following is a TRUE statement?

A)It is not normal for a business to have this much cash, therefore this is NOT a normal account balance.
B)It is NOT ever normal for the cash account to have a debit balance.
C)Normal account balances differ from company to company; therefore it is impossible to evaluate the given statement without more information.
D)It is ALWAYS normal for the cash account to have a debit balance.

Question 65

Expenses ________ Retained Earnings, and increase on the ________ side.

A)increase, debit
B)increase, credit
C)decrease, debit
D)decrease, credit

Question 66

An example of accounts with normal debit balances would be:

A)liabilities.
B)expenses.
C)revenues.
D)Stockholders' Equity.

Question 67

A company has a $14,457 credit balance in the cash account. Given this information, which of the following is a TRUE statement?

A)This is NOT a normal account balance-companies don't normally have this much cash on hand.
B)It is NOT normal for the cash account to have a credit balance.
C)Not enough information provided, since normal account balances are different for each company.
D)It is ALWAYS normal for the cash account to have a credit balance.

Question 68

The posting reference column of the general journal will include the number of the account to which the information is being posted.

Question 69

The act of recording a transaction is called "journalizing."

Question 70

A company has a $26,329 debit balance in the payable accounts. Given this information, which of the following is a TRUE statement?

A)It is NOT normal for payable accounts to have a debit balance
B)Not enough information provided, since normal account balances are different for each company.
C)Payable accounts don't tend to run this high, so this is not a normal balance.
D)It is ALWAYS normal for payable accounts to have a debit balance.

Question 71

The difference between the total debits and total credits of an account is called a:

A)trial balance.
B)sub-total.
C)ruling.
D)balance.

Question 72

The general journal is used to record the events (transactions)of a business.

Question 73

A company has an $11,263 credit balance in the payable accounts. Given this information, which of the following is a TRUE statement?

A)It is NOT normal for payable accounts to have a credit balance.
B)Not enough information provided, since normal account balances are different for each company.
C)It is ALWAYS normal for payable accounts to have a credit balance.
D)Payable accounts shouldn't be this high, so this is not a normal balance.

Question 74

When the bank takes money out of a company's account, why does the bank say that they have debited that account?

A)The bank has increased the company's assets and assets increase with debits.
B)The bank has decreased its' liability to the company and liabilities decrease with debits.
C)The bank has decreased the company's assets and assets decrease with debits.
D)The bank has increased its' liability to the company and liabilities increase with debits.

Question 75

Credit means:

A)decrease.
B)increase.
C)the right side of an account.
D)the left side of an account.

Question 76

Given the following T-Account information, what is the balance in accounts payable? Accounts Payable 212

A)$335 debit balance
B)$625 debit balance
C)$335 credit balance
D)$960 credit balance

Question 77

Journalizing is the transfer of information from the general journal to the general ledger.

Question 78

Revenues ________ Retained Earnings, and increase on the ________ side.

A)increase, debit
B)increase, credit
C)decrease, debit
D)decrease, credit

Question 79

Given the following T-Account information, what is the balance of the supplies account? Supplies 132

A)$475 debit balance
B)$475 credit balance
C)$670 debit balance
D)$195 credit balance

Question 80

The general journal was developed to organize transactions by account.