Deck 3: Analyzing Business Transactions Using T Accounts

Question 1

Credits increase Liabilities,Owner's Equity,and Revenue.

Answer 1

True

Question 2

The normal balance side of a liability account is the debit side.

Answer 2

False

Question 3

Financial statements are prepared after the trial balance is prepared.

Answer 3

True

Question 4

Increases in assets and expenses are both recorded with debits.

Question 5

If the total of the amounts on the debit side of an account is greater than the total on the credit side,the balance is recorded on the debit side.

Question 6

Increases in assets and revenue are both recorded with debits.

Question 7

An increase in an expense results in an increase in owner's equity.

Question 8

Debit entries increase asset,drawing,expense and liability accounts.

Question 9

Increases in the owner's drawing account are recorded with debits.

Question 10

When developing a chart of accounts,the highest block of numbers is assigned to asset accounts.

Question 11

After transactions for the period have been recorded,a trial balance is prepared to verify the equality of total debits and credits.

Question 12

Utilities Expense would be debited when a company receives a bill for utilities that it will pay later.

Question 13

The modern system of accounting is called the double-entry system because a debit to one account is balanced by a credit to another account.

Question 14

Another name for permanent accounts is real accounts.

Question 15

Revenue is a subdivision of owner's equity.

Question 16

When preparing the trial balance,the total debits should equal the total credits.

Question 17

Another name for temporary accounts is real accounts.

Question 18

A business transaction affects at least two accounts.

Question 19

When an owner invests assets in a business,the capital account is debited.

Question 20

Increases in owner's equity are recorded with credits.

Question 21

When equipment is purchased for cash,the accountant enters an amount on the left side of the ____________________ account.

Question 22

The error that occurs when the number $5.00 is written as $50.00 is called a(n)____________________ error.

Question 23

Expense accounts are increased by ____________________ the accounts.

Question 24

Separate written records called ____________________ are kept for each asset and liability and for the owner's equity of a business.

Question 25

Accountants use the term ____________________ when referring to the right side of an account.

Question 26

A statement prepared to test the accuracy of total debits and credits after transactions have been recorded is called a(n)___________________.

Question 27

A decrease in a liability is recorded on the ____________________ side of the account.

Question 28

Revenue and expense accounts are called nominal or ____________________ accounts.

Question 29

A special type of owner's equity account set up to record withdrawals of assets by the owner for personal use is called a(n)____________________ account.

Question 30

An entry on the right side of an account is called a(n)___________________.

Question 31

Another name for the profit and loss statement is the ____________________.

Question 32

Rent Revenue is increased by _________________ the account.

Question 33

The difference between the debit and credit side of an account is called the account ___________________.

Question 34

An account whose balance is transferred to another account at the end of an accounting period is a temporary account.

Question 35

The increase side of an account represents the ____________________ balance of the account.

Question 36

The error that occurs when the number $272.00 is written as $27.20 is called a(n)____________________ error.

Question 37

An account with a balance that carries over from one accounting period to another is a nominal account.

Question 38

An entry on the left side of an account is called a(n)___________________.

Question 39

A(n)____________________ account is used to record increases in owner's equity from the sale of goods or services.

Question 40

A column of figures is added and the total is entered in small pencil figures called a(n)___________________.

Question 41

A business pays a creditor on account.The entry to record this transaction is:

A) Debit Accounts Payable;Credit Cash
B) Debit Accounts Receivable;Credit Accounts Payable
C) Debit Cash;Credit Accounts Payable
D) Debit Accounts Receivable;Credit to Cash

Question 42

The classification and normal balance of the accounts receivable account is:

A) an asset with a credit balance
B) a liability with a debit balance
C) an asset with a debit balance
D) a revenue with a debit balance

Question 43

A business performed $6,000 of services.Their customer paid $1,000 of the amount owed right away but charged the remaining amount.To record this transaction,the business would:

A) Debit Cash $1,000 and Debit Accounts Receivable $5,000;Credit Fee Income $6,000
B) Debit Accounts Receivable $5,000 and;Credit Fee Income $5,000
C) Debit Cash $1,000;Credit Fee Income $1,000
D) Debit Cash $1,000;Credit Accounts Payable $5,000 and Credit Fee Income $6,000

Question 44

The ending capital balance appears on which of the following statement(s)?

A) Statement of owner's equity
B) Income Statement
C) Statement of owner's equity and balance sheet
D) Statement of owner's equity and income statement

Question 45

Debits are used to record increases in

A) assets and revenue.
B) revenue and owner's equity.
C) assets and expenses.
D) assets and liabilities.

Question 46

Which of the following represents the proper sequence for preparing the financial statements?

A) balance sheet,statement of owner's equity,income statement
B) income statement,balance sheet,statement of owner's equity
C) income statement,statement of owner's equity,balance sheet
D) statement of owner's equity,income statement,balance sheet

Question 47

Credits are used to record

A) decreases in assets and owner's equity and increases in liabilities.
B) decreases in assets,liabilities,and owner's equity.
C) decreases in liabilities and increases in assets and owner's equity.
D) increases in liabilities and owner's equity.

Question 48

A business receives a bill for utilities but decides to pay it next month.The business would record the receipt of the bill by:

A) Debiting Accounts Payable;Crediting Utilities Expense
B) Debiting Utilities Expense;Crediting Accounts Receivable
C) Debiting Utilities Expense;Crediting Accounts Payable
D) Debiting Utilities Expense;Crediting Cash

Question 49

A business purchases supplies on account.The entry to record this transaction is:

A) Debit to Cash;Credit Supplies
B) Debit to Supplies;Credit Accounts Receivable
C) Debit Supplies;Credit Accounts Payable
D) Debit Supplies;Credit to Cash

Question 50

A business purchases equipment costing $4,000.They pay $1,500 right away and charge the remaining amount.To record this transaction,the business would:

A) Debit Equipment $2,500;Credit Accounts Payable $2,500
B) Debit Equipment $1,500;Credit Cash $1,500
C) Debit Equipment $4,000;Credit Accounts Payable $4,000
D) Debit Equipment $4,000;Credit Cash $1,500 and Credit Accounts Payable $2,500

Question 51

Which of the following entries records the withdrawal of cash for personal use by Ty Knott,the owner of a business?

A) debit Cash and credit Ty Knott,Capital
B) debit Cash and credit Salary Expense
C) debit Salary Expense and credit Cash
D) debit Ty Knott,Drawing,and credit Cash

Question 52

On a statement of owner's equity,beginning capital is $30,000,Net Income for the year is $11,000 and Drawing for the year is $6,000,the ending capital amount would be

A) $30,000.
B) $35,000.
C) $47,000.
D) $25,000.

Question 53

Which of the following is not one of the formal financial statements that is made available to all users of the financial statements.

A) Trial Balance
B) Income Statement
C) Statement of Owner's Equity
D) Balance Sheet

Question 54

Debits are used to record

A) increases in assets.
B) increases in revenue.
C) increases in owner's equity.
D) increases in liabilities.

Question 55

Select the entry below that records paying employees for work performed during the pay period?

A) debit Cash and credit Salary Expense
B) debit Salary Expense and credit Cash
C) debit Salary Expense and credit Accounts Receivable
D) debit Cash,and credit Accounts Receivable

Question 56

In a Chart of Accounts,each category of accounts is given a __________ of numbers with gaps so that additional accounts can be added when needed.

Question 57

A business earns $4,000 from various charge account clients.To record this transaction,the business would:

A) Debit Accounts Receivable;Credit Cash
B) Debit Accounts Receivable;Credit Revenue
C) Debit Cash;Credit Accounts Receivable
D) Debit Accounts Payable;Credit Revenue

Question 58

The classification and normal balance of the salaries expense account is:

A) an expense with a credit balance
B) a liability with a debit balance
C) an asset with a debit balance
D) an expense with a debit balance

Question 59

The account Moriah Paige,_______________ would appear on both the Statement of Owner's Equity and the Balance Sheet.

Question 60

The order in which financial statements are prepared is determined by the fact that information from one is needed to prepare the next.Which statement is prepared last? ____________________.

Question 61

Which of the following accounts is NOT a nominal account?

A) Salaries Expense
B) Moriah Paige,Drawing
C) Rent Revenue
D) Office Supplies

Question 62

If a trial balance is not in balance (the Debit and Credit columns are not equal),a logical first step is to

A) check each account balance calculation.
B) check each account balance in the general ledger to the trial balance number.
C) check the addition of each column.
D) divide the difference by either 9 or 2.

Question 63

The ending balance of the capital account appears as a separate line item on what two statements?

A) the trial balance and the income statement
B) the statement of owner's equity and the income statement
C) the statement of owner's equity and the balance sheet
D) the income statement and the balance sheet

Question 64

The Net Income amount from the Income Statement is transferred to which of the following statements?

A) the profit and loss statement
B) the statement of owner's equity
C) the balance sheet
D) the trial balance

Question 65

When revenue is earned from charge-account sales,the accountant

A) debits a revenue account and credits the capital account.
B) debits Accounts Receivable and credits a revenue account.
C) debits a revenue account and credits Accounts Receivable.
D) debits Cash and credits a revenue account.

Question 66

If assets are numbered from 100-199,which of the following accounts would not be given a number in the 100 series?

A) Supplies
B) Accounts Payable
C) Prepaid Rent
D) Accounts Receivable

Question 67

When charge customers pay cash to apply against their accounts,the amount is recorded

A) on the left side of the Cash account and the right side of the Fees Income account.
B) on the left side of the Accounts Payable account and the right side of the Cash account.
C) on the left side of the Cash account and the right side of the Accounts Receivable account.
D) on the left side of the Cash account and the left side of the Accounts Receivable account.

Question 68

The account used to record increases in owner's equity from the sale of goods or services is

A) the revenue account.
B) the Cash account.
C) the capital account.
D) the drawing account.

Question 69

Which of the following would result in an error when preparing the Trial Balance?

A) Placing the Withdrawal account balance in the Debit column
B) Placing a Revenue account balance in the Credit column
C) Placing the balance in Prepaid Rent in the Credit column
D) Placing the Accounts Payable balance in the Credit column

Question 70

Identify the accounts below that would ALL appear on the balance sheet.

A) Cash,Accounts Payable,Owner's Capital (ending balance)
B) Accounts Receivable,Accounts Payable,Fee Income
C) Utility Expense,Salary Expense,Cash
D) Owner's Capital (beginning),Owner's Drawing,Supplies Expense

Question 71

The "Net Income" or "Net Loss" is transferred from the income statement to the

A) balance sheet.
B) chart of accounts.
C) statement of owner's equity.
D) trial balance.

Question 72

A firm paid cash to apply against a debt.To record this transaction,the accountant would

A) debit Accounts Receivable and credit Cash.
B) debit Accounts Payable and credit Cash.
C) debit Cash and credit Accounts Payable.
D) credit Cash and credit Accounts Payable.

Question 73

Which of the following types of accounts normally have debit balances?

A) assets and revenue
B) assets,liabilities,and owner's equity
C) expenses and assets
D) liabilities and owner's equity

Question 74

The normal balance of an account is the

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

Question 75

Which of the following accounts is not a permanent account?

A) Cash
B) Accounts Payable
C) Salaries Expense
D) Thomas Bernard,Capital

Question 76

An accounting system that involves recording the effects of each transaction as debits and credits is

A) completing one T account.
B) the double-entry system.
C) preparing financial statements.
D) analyzing a business transaction.

Question 77

Which of the following does NOT describe a transposition?

A) It is an error.
B) It involves misplaced digits in a number.
C) It causes the difference between the debit total and the credit total to be divisible by 2.
D) It causes the trial balance to be out of balance.

Question 78

Which of the following groups contain only accounts that normally have credit balances?

A) Accounts Receivable and Fees Income
B) Salaries Expense and Accounts Payable
C) Fees Income and John Smith,Capital
D) Accounts Payable and Equipment

Question 79

The total of the figures on the left side of a Cash account is $25,800.The total of the figures on the right side is $14,100.The balance of this account

A) is $11,700 and would be recorded on the right side of the account.
B) is $39,900 and would be recorded on the left side of the account.
C) is $39,900 and would be recorded on the right side of the account.
D) is $11,700 and would be recorded on the left side of the account.

Question 80

Which of the following increase owner's equity?

A) expenses
B) revenue
C) withdrawals
D) receiving cash from customers