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Fundamental Accounting Principles

Business

Quiz 2 :

Analyzing and Recording Transactions

Quiz 2 :

Analyzing and Recording Transactions

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Double-entry accounting means that every transaction affects and is recorded in at least two accounts.
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True False
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Answer:

True

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The left side of a T-account is always the credit side, while the right side is always the debit side.
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True False
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Answer:

False

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To make it easier for the bookkeeper, the cost of land is separated from the cost of buildings located on the land.
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True False
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Answer:

False

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Credits to accounts are always increases.
True False
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The accounting equation is expressed as assets = liabilities - equity.
True False
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A T-Account is a formal account frequently used in business.
True False
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Withdrawals are a type of transaction that affects equity.
True False
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In a double-entry accounting system, total debits must always equal total credits.
True False
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The accounting equation can be expressed as liabilities = assets - equity.
True False
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An account is a detailed record of increases and decreases in a specific asset, liability or equity item.
True False
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A building is an example of an asset that does not provide any benefit to its owner.
True False
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Unearned revenues are assets, because a service or product is owed to the customer.
True False
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Goods sold on credit to customers are called accounts payable.
True False
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Debits increase asset and expense accounts.
True False
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When a company sells services in which cash will not be received until some future date, the company should credit an unearned revenues account for the amount charged to the customer.
True False
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The first step in the accounting cycle is to analyze transactions.
True False
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Cash withdrawn by the owner of an unincorporated business in the form of a monthly salary should be treated as an expense of the business.
True False
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A prepaid expense occurs when a company pays in advance for a service or goods for which the benefit extends beyond the current accounting period.
True False
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A ledger is a type of account.
True False
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An account balance is the difference between the increases and decreases recorded in an account.
True False
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