Question 1

A chart of accounts is:

Accepted Answer

A)   a list of all income statement accounts
B)   a list of all accounts
C)   a list of all balance sheet accounts
D)   a list of all accounts with their ending balancesE) A) and B)
F) A) and C)

Question 2

Expenses increase shareholders' equity. That is why they are credits.

Accepted Answer

A) True 
 B)False

Question 3

A record of all the changes in a particular asset during a period of time is found in a(n) :

Accepted Answer

A)   transaction
B)   prior period's balance sheet
C)   account
D)   trial balanceE) C) and D)
F) A) and D)

Question 4

The normal balance of an expense account is a while the normal balance of a revenue account is a .

Accepted Answer

A)   credit; credit
B)   debit; debit
C)   credit; debit
D)   debit; creditE) A) and B)
F) A) and C)

Question 5

An owner investment of a building, valued at $100,000 with an $80,000 outstanding mortgage, transferring this asset into the business would:

Accepted Answer

A)   increase shareholders' equity by $20,000
B)   increase shareholders' equity by $100,000
C)   increase assets by $20,000
D)   increase assets by $80,000E) None of the above
F) A) and D)

Question 6

The retained earnings account represents the money invested by shareholders into the business since its inception.

Accepted Answer

A) True 
 B)False

Question 7

A trial balance that is "in balance" proves:

Accepted Answer

A)   all transactions were properly recorded during the accounting period
B)   all journal entries were properly posted to the ledger
C)   the equality of the debits and credits
D)   that the financial statement cannot be prepared using the account balancesE) B) and D)
F) All of the above

Question 8

Paying a utility bill when received would:

Accepted Answer

A)   increase expenses
B)   increase liabilities
C)   decrease revenues
D)   increase owners' equityE) A) and D)
F) B) and C)

Question 9

The purchase of an automobile with a cash down payment and a written promise to pay the balance in the future would include a:

Accepted Answer

A)   debit to Cash and a debit to Note Payable
B)   debit to Cash and a credit to Automobile
C)   credit to Cash and a credit to Note Payable
D)   debit to Note Payable and a credit to CashE) All of the above
F) B) and C)

Question 10

If the debit amount of an entry to record the purchase of supplies on account was not posted:

Accepted Answer

A)   assets would be understated
B)   liabilities would be understated
C)   assets would be overstated
D)   liabilities would be overstatedE) B) and D)
F) None of the above

Question 11

The purchase of land for cash would:

Accepted Answer

A)   increase total assets
B)   increase the total debits on the trial balance
C)   decrease shareholders' equity
D)   not affect the total of debits or credits on the trial balanceE) B) and D)
F) A) and B)

Question 12

All shareholders' equity accounts typically have a credit balance except for dividends which are a debit.

Accepted Answer

A) True 
 B)False

Question 13

The account credited when supplies are purchased on account is:

Accepted Answer

A)   Accounts Payable
B)   Supplies Expense
C)   Supplies
D)   CashE) A) and B)
F) B) and D)

Question 14

On a trial balance the total of all debits must equal the total of all credits.

Accepted Answer

A) True 
 B)False

Question 15

The normal balance of a revenue account is a because revenues increase .

Accepted Answer

A)   credit; liabilities
B)   debit; assets
C)   credit; shareholders' equity
D)   debit; dividendsE) None of the above
F) B) and C)

Question 16

The Dividends account normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 17

An organization's list of all its accounts and the related account numbers is called a:

Accepted Answer

A)   ledger
B)   chart of accounts
C)   trial balance
D)   journalE) B) and D)
F) B) and C)

Question 18

In accounting, the process of posting is:

Accepted Answer

A)   copying data from the ledger to the journal
B)   copying data from the journal to the ledger
C)   copying data from the source documents to the journal
D)   copying data from the source documents to the ledgerE) A) and C)
F) C) and D)

Question 19

A journal is a record of financial transactions and can be thought of as a diary; it shows a chronological listing of a business's accounting activities.

Accepted Answer

A) True 
 B)False

Question 20

The normal balance of the Accounts Payable account is aaccount.

Accepted Answer

A)   credit; liability
B)   credit; shareholders' equity
C)   credit; revenue
D)   debit; assetE) B) and C)
F) A) and B)

Exam 2: Recording Business Transactions

All shareholders' equity accounts typically have a credit balance except for dividends which are a debit.

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A trial balance that is "in balance" proves:

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On a trial balance the total of all debits must equal the total of all credits.

Correct AnswerverifiedShow Answer

An organization's list of all its accounts and the related account numbers is called a:

Correct AnswerverifiedShow Answer

The purchase of an automobile with a cash down payment and a written promise to pay the balance in the future would include a:

Correct AnswerverifiedShow Answer

Expenses increase shareholders' equity. That is why they are credits.

Correct AnswerverifiedShow Answer

The normal balance of an expense account is a while the normal balance of a revenue account is a .

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The Dividends account normally has a debit balance.

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If the debit amount of an entry to record the purchase of supplies on account was not posted:

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The purchase of land for cash would:

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The account credited when supplies are purchased on account is:

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In accounting, the process of posting is:

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A record of all the changes in a particular asset during a period of time is found in a(n) :

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The normal balance of the Accounts Payable account is aaccount.

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The normal balance of a revenue account is a because revenues increase .

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A chart of accounts is:

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Paying a utility bill when received would:

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A journal is a record of financial transactions and can be thought of as a diary; it shows a chronological listing of a business's accounting activities.

Correct AnswerverifiedShow Answer

The retained earnings account represents the money invested by shareholders into the business since its inception.

Correct AnswerverifiedShow Answer

An owner investment of a building, valued at $100,000 with an $80,000 outstanding mortgage, transferring this asset into the business would:

Correct AnswerverifiedShow Answer

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