Deck 2: The Recording Process

Question 1

The accounting equation can be used to analyse transactions for:

A) a company.
B) a sole trader.
C) a not-for-profit entity.
D) all of the above.

Answer 1

all of the above.

Question 2

Shareholders paying cash to purchase shares in a company increases:

A) assets and equity.
B) assets and liabilities.
C) liabilities and equity.
D) assets only.

Answer 2

assets and equity.

Question 3

The cash payment of a liability:

A) decreases assets and equity.
B) increases assets and decreases liabilities.
C) decreases assets and increases liabilities.
D) decreases assets and liabilities.

Answer 3

decreases assets and liabilities.

Question 4

A cash payment of a dividend:

A) decreases assets and equity.
B) increases assets and equity.
C) increases assets and decreases equity.
D) decreases assets and increases equity.

Question 5

An expense incurred:

A) decreases assets and liabilities.
B) decreases equity.
C) leaves equity unchanged.
D) increases equity.

Question 6

When a business receives an unpaid electricity account, it should:

A) debit Electricity expense and credit Accounts receivable.
B) debit Electricity expense and credit Accounts payable.
C) debit Accounts payable and credit Electricity expense.
D) make no entry until the bill is paid.

Question 7

A $20,000 machine is purchased by paying $5,000 cash and agreeing to pay for the remainder in 30 days' time, the journal entry should include a:

A) credit to Accounts payable.
B) debit to Cash.
C) credit to Revenue.
D) credit to Machinery.

Question 8

A credit to which account will increase equity?

A) Electricity payable.
B) Prepaid insurance.
C) Revenue.
D) Plant and equipment.

Question 9

The Dividends paid account:

A) normally has a credit balance.
B) increases equity.
C) is increased with debits and decreased with credits.
D) is not a proper sub-account of equity.

Question 10

Selected transactions for Kookaburra Ltd are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities and equity.
Sample: Made initial cash investment in the business.
The answer would be - Increase in assets and increase in Equity.
-Paid monthly electricity bill.

Question 11

Selected transactions for Kookaburra Ltd are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities and equity.
Sample: Made initial cash investment in the business.
The answer would be - Increase in assets and increase in Equity.
-Purchased new display case for cash.

Question 12

Selected transactions for Kookaburra Ltd are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities and equity.
Sample: Made initial cash investment in the business.
The answer would be - Increase in assets and increase in Equity.
-Paid cash for repair work on security system.

Question 13

Selected transactions for Kookaburra Ltd are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities and equity.
Sample: Made initial cash investment in the business.
The answer would be - Increase in assets and increase in Equity.
-Invoiced customers for services performed.

Question 14

Selected transactions for Kookaburra Ltd are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities and equity.
Sample: Made initial cash investment in the business.
The answer would be - Increase in assets and increase in Equity.
-Received cash from customers invoiced in transaction 4.

Question 15

Selected transactions for Kookaburra Ltd are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities and equity.
Sample: Made initial cash investment in the business.
The answer would be - Increase in assets and increase in Equity.
-Dividends paid to owners.

Question 16

Selected transactions for Kookaburra Ltd are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities and equity.
Sample: Made initial cash investment in the business.
The answer would be - Increase in assets and increase in Equity.
-Incurred advertising expenses on account.

Question 17

Selected transactions for Kookaburra Ltd are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities and equity.
Sample: Made initial cash investment in the business.
The answer would be - Increase in assets and increase in Equity.
-Paid monthly rent.

Question 18

Selected transactions for Kookaburra Ltd are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities and equity.
Sample: Made initial cash investment in the business.
The answer would be - Increase in assets and increase in Equity.
-Received cash from customers when service was rendered.

Question 19

Selected accounts from the ledger of Platypus Ltd appear below. For each account, indicate the following:
In the first column at the right, indicate the nature of each account, using the following abbreviations:
(b) In the second column, indicate the normal balance by inserting Dr. or Cr.

Question 20

For each item below, indicate whether a debit or credit applies:

-Decrease in Loan payable

A) Dr.
B) Cr.

Question 21

For each item below, indicate whether a debit or credit applies:

-Increase in Dividends paid

A) Dr.
B) Cr.

Question 22

For each item below, indicate whether a debit or credit applies:

-Increase in Equity

A) Dr.
B) Cr.

Question 23

For each item below, indicate whether a debit or credit applies:

-Increase in Revenue received in advance (Unearned revenue)

A) Dr.
B) Cr.

Question 24

For each item below, indicate whether a debit or credit applies:

-Decrease in Interest payable

A) Dr.
B) Cr.

Question 25

For each item below, indicate whether a debit or credit applies:

-Increase in Prepaid insurance

A) Dr.
B) Cr.

Question 26

For each item below, indicate whether a debit or credit applies:

-Decrease in Wages expense

A) Dr.
B) Cr.

Question 27

For each item below, indicate whether a debit or credit applies:

-Decrease in Supplies

A) Dr.
B) Cr.

Question 28

For each item below, indicate whether a debit or credit applies:

-Increase in Revenues

A) Dr.
B) Cr.

Question 29

For each item below, indicate whether a debit or credit applies:

-Decrease in Accounts receivable

A) Dr.
B) Cr.

Question 30

For each item , indicate whether a debit or credit applies:

-Decrease in Prepaid rent

A) Dr.
B) Cr.

Question 31

For each item , indicate whether a debit or credit applies:

-Increase in Revenues

A) Dr.
B) Cr.

Question 32

For each item , indicate whether a debit or credit applies:

-Decrease in Unearned revenues (Unearned revenue)

A) Dr.
B) Cr.

Question 33

For each item , indicate whether a debit or credit applies:

-Increase in Dividends paid

A) Dr.
B) Cr.

Question 34

For each item , indicate whether a debit or credit applies:

-Decrease in Interest receivable

A) Dr.
B) Cr.

Question 35

For each item , indicate whether a debit or credit applies:

-Increase in Depreciation expense

A) Dr.
B) Cr.

Question 36

For each item , indicate whether a debit or credit applies:

-Decrease in Accounts payable

A) Dr.
B) Cr.

Question 37

For each item , indicate whether a debit or credit applies:

-Increase in Supplies

A) Dr.
B) Cr.

Question 38

For each item , indicate whether a debit or credit applies:

-Increase in Wage expense

A) Dr.
B) Cr.

Question 39

For each item , indicate whether a debit or credit applies:

-Decrease in Accounts receivable

A) Dr.
B) Cr.

Question 40

Gwen Stefani decides to incorporate a company and open a pizza bar near the local university campus. Analyse the following transactions for the month of July in terms of their effect on the basic accounting equation. Record each transaction by increasing (+) or decreasing (-) the dollar amount of each item affected. Indicate the new balance of each item after a transaction is recorded. It is not necessary to identify the cause of changes in equity.
Transactions:
(1) Gwen Stefani invests $25,000 cash in exchange for share capital to start a pizza bar business on July 1.
(2) Purchased baking equipment for $5,000 paying $3,000 in cash and the remainder is due in 30 days.
(3) Purchased cooking supplies for $1,200 cash.
(4) Received an account from Campus News for $300 for advertising in the campus newspaper.
(5) Cash receipts from customers for pizza sales amounted to $1,500.
(6) Paid salaries of $200 to student workers.
(7) Invoiced the Tiger Football Team $100 for pizzas ordered.
(8) Paid $300 to Campus News for advertising that was previously invoiced in Transaction 4.
(9) Gwen Stefani was paid dividends of $700.
(10) Incurred electricity expenses for month on account, $200.

Question 41

Analyse the following transactions in terms of their effect on the basic accounting equation. Record each transaction by increasing (+) or decreasing (-) the dollar amount of each item affected. Indicate the new balance of each item after a transaction is recorded.
1. Issued shares to investors for $12,000 in cash.
2. Purchased supplies on credit for $700.
3. Invoiced customers $400 for services provided.
4. Paid for supplies purchased in transaction 2.
5. Paid dividends of $300 cash to shareholders.
6. Received half of amount owing by customers invoiced in transaction 3.
7. Received and paid electricity bill for $50.

Question 42

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account.

-An increase in Salary expense.

A) Debit
B) Credit

Question 43

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account.

-A decrease in Accounts payable.

A) Debit
B) Credit

Question 44

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account.

-An increase in Prepaid insurance.

A) Debit
B) Credit

Question 45

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account.

-An increase in Share capital.

A) Debit
B) Credit

Question 46

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account.

-A decrease in Office supplies.

A) Debit
B) Credit

Question 47

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account.

-An increase in Dividends paid

A) Debit
B) Credit

Question 48

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account.

-An increase in Service revenue.

A) Debit
B) Credit

Question 49

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account.

-A decrease in Accounts receivable.

A) Debit
B) Credit

Question 50

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account.

-An increase in Rent expense.

A) Debit
B) Credit

Question 51

Under a double-entry accounting system, show how the entry for each transaction listed is entered in the ledger by choosing debit or credit to indicate the increase or decrease in the effected account.

-A decrease in Store equipment.

A) Debit
B) Credit

Question 52

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have:

-Advertising expense

A) debit entries only
B) credit entries only
C) both debit and credit entries

Question 53

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have:

-Service revenue

A) debit entries only
B) credit entries only
C) both debit and credit entries

Question 54

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have:

-Accounts payable

A) debit entries only
B) credit entries only
C) both debit and credit entries

Question 55

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have:

-Accounts receivable

A) debit entries only
B) credit entries only
C) both debit and credit entries

Question 56

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have:

-Share capital

A) debit entries only
B) credit entries only
C) both debit and credit entries

Question 57

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have:

-Dividends

A) debit entries only
B) credit entries only
C) both debit and credit entries

Question 58

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have:

-Cash

A) debit entries only
B) credit entries only
C) both debit and credit entries

Question 59

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have:

-Salaries expense

A) debit entries only
B) credit entries only
C) both debit and credit entries

Question 60

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have:

-Loan payable

A) debit entries only
B) credit entries only
C) both debit and credit entries

Question 61

During an accounting period, a business has numerous transactions affecting each of the following accounts. Select for each account what it is likely to have:

-Insurance expense

A) debit entries only
B) credit entries only
C) both debit and credit entries

Question 62

Eight transactions are recorded in the following T accounts:
Indicate for each debit and each credit:
(a) whether an asset, liability, share capital, dividends, revenue or expense account was affected
(b) whether the account was increased (+) or (-) decreased. Answers should be presented in the following chart form:

Question 63

For each of the following accounts indicate:
(a) the type of account (asset, liability, equity, revenue, expense)
(b) the debit and credit effects
(c) the normal account balance.

-Accounts payable

Question 64

For each of the following accounts indicate:
(a) the type of account (asset, liability, equity, revenue, expense)
(b) the debit and credit effects
(c) the normal account balance.

-Accounts receivable

Question 65

For each of the following accounts indicate:
(a) the type of account (asset, liability, equity, revenue, expense)
(b) the debit and credit effects
(c) the normal account balance.

-Share capital

Question 66

For each of the following accounts indicate:
(a) the type of account (asset, liability, equity, revenue, expense)
(b) the debit and credit effects
(c) the normal account balance.

-Dividends

Question 67

For each of the following accounts indicate:
(a) the type of account (asset, liability, equity, revenue, expense)
(b) the debit and credit effects
(c) the normal account balance.

-Service revenue

Question 68

For each of the following accounts indicate:
(a) the type of account (asset, liability, equity, revenue, expense)
(b) the debit and credit effects
(c) the normal account balance.

-Insurance expense

Question 69

For each of the following accounts indicate:
(a) the type of account (asset, liability, equity, revenue, expense)
(b) the debit and credit effects
(c) the normal account balance.

-Loan payable

Question 70

For each of the following accounts indicate:
(a) the type of account (asset, liability, equity, revenue, expense)
(b) the debit and credit effects
(c) the normal account balance.

-Equipment

Question 71

Journalise the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transactions.
1. Shareholders invest $35,000 in cash in starting a real estate office operating as a company.
2. Purchased $400 of office supplies on credit.
3. Purchased office equipment for $6,000, paying $2,500 in cash and the remainder on credit. $3,500, loan
4. Real estate commissions invoiced to clients amount to $4,000.
5. Paid $700 in cash for the current month's rent.
6. Paid $200 cash on account for office supplies purchased in transaction 2.
7. Received an account for $500 for advertising for the current month.
8. Paid $2,200 cash for office salaries.
9. Paid $1,200 cash dividends to shareholders.
10. Received a cheque for $3,000 from a client in payment on account for commissions invoiced in transaction 4.

Question 72

Journalise the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transaction.
1. Owner invested $30,000 in exchange for share capital of the company.
2. Hired an employee to be paid $200 per week, starting tomorrow.
3. Paid two years' rent in advance, $7,200.
4. Paid the worker's weekly wage.
5. Recorded revenue earned and received for the week, $1,500.

Question 73

Journalise the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transactions.
1. Received $35,000 from shareholders.
2. Purchased equipment for $45,000, paying $15,000 in cash and the remainder is due in 30 days.
3. Paid $3,000 rent for the month.
4. Recorded $12,500 of services provided on account.
5. Paid wages of $7,500.
6. Received $7,000 in cash for services provided.
7. Collected $2,000 from customers on account.

Question 74

Transactions for Wombat Ltd for the month of October are presented below. Journalise each transaction and identify each transaction by number. You may omit journal explanations.
1. Shareholders invested an additional $36,000 cash in the business.
2. Purchased land costing $28,000 for cash.
3. Purchased equipment costing $8,000 for $4,000 cash and the remainder on credit.
4. Purchased supplies on account for $800.
5. Paid $1,000 for a one-year insurance policy.
6. Received $2,000 cash for services performed.
7. Received $4,000 for services previously performed on account.
8. Paid wages to employees for $2,500.
9. Paid dividends to shareholders of $400.

Question 75

The transactions of the Cockatoo Café Ltd are recorded in the general journal below. You are to post the journal entries to the accounts in the general ledger. After all entries have been posted, you are to prepare a trial balance on the form provided.

Question 76

The accounts in the trial balance of Koala Ltd are shown below. Select whether the account balance is normally a debit (Dr) or a credit (Cr).

-Retained earnings

A) Dr
B)Cr

Question 77

The accounts in the trial balance of Koala Ltd are shown below. Select whether the account balance is normally a debit (Dr) or a credit (Cr).

-Service revenue

A) Dr
B)Cr

Question 78

The accounts in the trial balance of Koala Ltd are shown below. Select whether the account balance is normally a debit (Dr) or a credit (Cr).

-Wages expense

A) Dr
B)Cr

Question 79

The accounts in the trial balance of Koala Ltd are shown below. Select whether the account balance is normally a debit (Dr) or a credit (Cr).

-Revenue received in advance

A) Dr
B)Cr

Question 80

The accounts in the trial balance of Koala Ltd are shown below. Select whether the account balance is normally a debit (Dr) or a credit (Cr).

-Bank loan payable

A) Dr
B)Cr