Question 1

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:
A)Withdrawals account.
B)Capital account.
C)Drawing account.
D)T-account.
E)Balance column sheet.

Accepted Answer

A T-account is a visual representation of a ledger account with debits on the left and credits on the right. It is called a T-account because it looks like the letter T. It helps to determine the balance of an account and to understand how transactions affect that balance.

Question 2

An account balance is:
A)The total of the credit side of the account.
B)The total of the debit side of the account.
C)The difference between the total debits and total credits for an account including the beginning balance.
D)Assets = liabilities + equity.
E)Always a credit.

Accepted Answer

An account balance refers to the difference between the total debits and total credits for an account, including the beginning balance. This means that both the debit and credit sides are taken into account when calculating the balance. Options A, B, D, and E do not accurately describe an account balance.

Question 3

Able Graphics received a $400 utility bill for the current month's electricity.It is not due until the end of the next month which is when they intend to pay it.Which of the following general journal entries will Able Graphics make to record this transaction?
A) 
B) 
C) 
D)

Accepted Answer

The answer of Able Graphics received a $400 utility bill...

Question 4

Willow Rentals purchased office supplies on credit.The general journal entry made by Willow Rentals will include a:
A)Debit to Accounts Payable.
B)Debit to Accounts Receivable.
C)Credit to Cash.
D)Credit to Accounts Payable.
E)Credit to Willow,Capital.

Accepted Answer

When purchasing office supplies on credit, Willow Rentals will increase their liability to the supplier (Accounts Payable). Therefore, the journal entry will involve a credit to Accounts Payable, which is the amount owed to the supplier, and a debit to the appropriate expense account (e.g. Office Supplies Expense). Option A, debit to Accounts Payable, is the correct answer. Options B, C, and E are not relevant to this transaction.

Question 5

Ralph Pine Consulting received its telephone bill in the amount of $300,and immediately paid it.Pine's general journal entry to record this transaction will include a
A)Debit to Telephone Expense for $300.
B)Credit to Accounts Payable for $300.
C)Debit to Cash for $300.
D)Credit to Telephone Expense for $300.
E)Debit to Accounts Payable for $300.

Accepted Answer

The telephone bill is an expense, so it is debited to Telephone Expense. Since it was paid immediately, Cash is credited, not Accounts Payable.

Question 6

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided.Which of the following general journal entries will Trimble Graphic Design make to record this transaction?
A) 
B) 
C) 
D)

Accepted Answer

The answer of Trimble Graphic Design receives $1,500 from a...

Question 7

Golddigger Services Inc.provides services to clients.On May 1,a client prepaid Golddigger Services $60,000 for 6-months services in advance.Golddigger Services' general journal entry to record this transaction will include a:
A)Debit to Unearned Management Fees for $60,000.
B)Credit to Management Fees Earned for $60,000.
C)Credit to Cash for $60,000.
D)Credit to Unearned Management Fees for $60,000.
E)Debit to Management Fees Earned for $60,000.

Accepted Answer

The prepayment of services represents unearned revenue for Golddigger Services. Therefore, the appropriate journal entry is to credit the liability account Unearned Management Fees for $60,000 and debit the asset account Cash for $60,000. Option D correctly reflects this entry.

Question 8

Select the account below that normally has a credit balance.
A)Cash.
B)Office Equipment.
C)Wages Payable.
D)Owner,Withdrawals.
E)Sales Salaries Expense.

Accepted Answer

Wages Payable typically has a credit balance because it represents the amount of wages owed to employees but not yet paid out.

Question 9

A debit is used to record which of the following:
A)A decrease in an asset account.
B)A decrease in an expense account.
C)An increase in a revenue account.
D)An increase in the owner's capital account.
E)An increase in the owner's withdrawals account.

Accepted Answer

A debit increases the owner's withdrawals account, which is a contra-equity account, meaning it reduces the overall equity.

Question 10

A credit entry:
A)Increases asset and expense accounts,and decreases liability,owner's capital,and revenue accounts.
B)Is always a decrease in an account.
C)Decreases asset and expense accounts,and increases liability,owner's capital,and revenue accounts.
D)Is recorded on the left side of a T-account.
E)Is always an increase in an account.

Accepted Answer

A credit entry decreases asset and expense accounts, and increases liability, owner's capital, and revenue accounts, following the rules of double-entry bookkeeping.

Question 11

Identify the statement below that is correct?
A)The left side of a T-account is the credit side.
B)Debits decrease asset and expense accounts,and increase liability,equity,and revenue accounts.
C)The left side of a T-account is the debit side.
D)Credits increase asset and expense accounts,and decrease liability,equity,and revenue accounts.
E)In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction.

Accepted Answer

The left side of a T-account is always the debit side. Debits increase asset and expense accounts, and decrease liability, equity, and revenue accounts. The right side of a T-account is always the credit side. Credits increase liability, equity, and revenue accounts, and decrease asset and expense accounts. Choice A and D are incorrect because they confuse the left and right sides of a T-account. Choice B is partially correct but reverses the effects of debits and credits. Choice E is true but not relevant to determining the correct statement about T-accounts.

Question 12

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed.Given the choices below,determine the general journal entry that Grills R Us Catering will make to record this transaction.
A) 
B) 
C) 
D)

Accepted Answer

The answer of Grills R Us Catering provided $1,000 of...

Question 13

J.Brown Consulting paid $500 cash for utilities for the current month.Given the choices below,determine the general journal entry that J.Brown Consulting will make to record this transaction.
A) 
B) 
C) 
D)

Accepted Answer

The answer of J.Brown Consulting paid $500 cash for utilities...

Question 14

ABC Catering received $800 cash from a customer for catering services to be provided next month.Given the choices below,determine the general journal entry that ABC Catering will make to record this transaction.
A) 
B) 
C) 
D)

Accepted Answer

The answer of ABC Catering received $800 cash from a...

Question 15

Richard Redden contributed $70,000 in cash and land worth $130,000 to open a new business,RR Consulting.Which of the following general journal entries will RR Consulting make to record this transaction?
A)Debit Assets $200,000;credit Redden,Capital,$200,000.
B)Debit Cash and Land,$200,000;credit Redden,Capital,$200,000.
C)Debit Cash $70,000;debit Land $130,000;credit Redden,Capital,$200,000.
D)Debit Redden,Capital,$200,000;credit Cash $70,000,credit Land,$130,000.
E)Debit Redden,Capital,$200,000;credit Assets,$200,000.

Accepted Answer

The transaction involves contribution of both cash and land, so both assets need to be recorded separately. The correct journal entry would be to debit Cash for $70,000, debit Land for $130,000, and credit Redden, Capital for $200,000, as shown in choice C.

Question 16

J.Brown Consulting paid $2,500 cash for a 5-month insurance policy which begins on December 1.Given the choices below,determine the general journal entry that J.Brown Consulting will make to record this transaction.
A) 
B) 
C) 
D)

Accepted Answer

The answer of J.Brown Consulting paid $2,500 cash for a...

Question 17

J.Smith withdrew $100 from Jay's Limo Services for personal use.Which of the following general journal entries will Jay's Limo Services make to record this transaction?
A) 
B) 
C) 
D)

Accepted Answer

The answer of J.Smith withdrew $100 from Jay's Limo Services...

Question 18

A double-entry accounting system is an accounting system:
A)That records each transaction twice.
B)That records the effects of transactions and other events in at least two accounts with equal debits and credits.
C)In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.
D)That may only be used if T-accounts are used.
E)That insures that errors never occur.

Accepted Answer

A double-entry accounting system records each transaction in at least two accounts with equal debits and credits. This ensures the accounting equation (Assets = Liabilities + Equity) remains in balance and helps prevent errors. A double-entry system does not necessarily require the use of T-accounts and does not guarantee that errors never occur. Option A is partially correct, but it is not the defining characteristic of a double-entry system. Option C is incorrect as each transaction must have equal debits and credits.

Question 19

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately.Which of the following general journal entries will Wiley Consulting make to record this transaction?
A) 
B) 
C) 
D)

Accepted Answer

The answer of Wiley Consulting purchased $7,000 worth of supplies...

Question 20

An asset created by prepayment of an insurance expense is:
A)Recorded as a debit to Unearned Revenue.
B)Recorded as a debit to Prepaid Insurance.
C)Recorded as a credit to Unearned Revenue.
D)Recorded as a credit to Prepaid Insurance.
E)Not recorded in the accounting records until the insurance period expires.

Accepted Answer

When prepaying for insurance expenses, the amount is recorded as a debit to Prepaid Insurance, indicating that it is a prepaid expense and will be used up over time.

Quiz 2: Analyzing and Recording Transactions

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

An account balance is:

Able Graphics received a $400 utility bill for the current month's electricity.It is not due until the end of the next month which is when they intend to pay it.Which of the following general journal entries will Able Graphics make to record this transaction?

Willow Rentals purchased office supplies on credit.The general journal entry made by Willow Rentals will include a:

Ralph Pine Consulting received its telephone bill in the amount of $300,and immediately paid it.Pine's general journal entry to record this transaction will include a

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided.Which of the following general journal entries will Trimble Graphic Design make to record this transaction?

Golddigger Services Inc.provides services to clients.On May 1,a client prepaid Golddigger Services $60,000 for 6-months services in advance.Golddigger Services' general journal entry to record this transaction will include a:

Select the account below that normally has a credit balance.

A debit is used to record which of the following:

A credit entry:

Identify the statement below that is correct?

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed.Given the choices below,determine the general journal entry that Grills R Us Catering will make to record this transaction.

J.Brown Consulting paid $500 cash for utilities for the current month.Given the choices below,determine the general journal entry that J.Brown Consulting will make to record this transaction.

ABC Catering received $800 cash from a customer for catering services to be provided next month.Given the choices below,determine the general journal entry that ABC Catering will make to record this transaction.

Richard Redden contributed $70,000 in cash and land worth $130,000 to open a new business,RR Consulting.Which of the following general journal entries will RR Consulting make to record this transaction?

J.Brown Consulting paid $2,500 cash for a 5-month insurance policy which begins on December 1.Given the choices below,determine the general journal entry that J.Brown Consulting will make to record this transaction.

J.Smith withdrew $100 from Jay's Limo Services for personal use.Which of the following general journal entries will Jay's Limo Services make to record this transaction?

A double-entry accounting system is an accounting system:

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately.Which of the following general journal entries will Wiley Consulting make to record this transaction?

An asset created by prepayment of an insurance expense is: