Accounting Chapter 2 Test

The purchase of supplies on account should result in A. a debit to Supplies Expense and a credit to Cash. B. a debit to Supplies Expense and a credit to Accounts Payable. C. a debit to Supplies and a credit to Accounts Payable. D. a debit to Supplies and a credit to Accounts Receivable.

C

The debit and the credit columns of a trial balance each total $80,000. Which error may still exist? A. A journal entry contains a correct debit amount and an incorrect credit amount. B. A debit entry to the Cash account in the journal is incorrectly posted as a credit to the Cash account in the ledger. C. The credit portion of a journal entry is posted to the ledger twice. D. A cash payment on account of $450 is incorrectly recorded as a cash payment on account of $540.

D

A credit to a revenue account A. indicates an increase in revenues earned. B. indicates a decrease in revenues earned. C. must be accompanied by a debit to an expense account. D. is an error.

A

A trial balance A. is a list of accounts with their balances at a given time. B. proves the mathematical accuracy of journalized transactions. C. will not balance if a correct journal entry is posted twice. D. proves that all transactions have been recorded.

A

Companies initially record transactions in the general journal in chronological order. A. True B. False

A

Companies prepare a trial balance at the end of an accounting period and it is useful in preparing financial statements. A. True B. False

A

The entire group of accounts maintained by a company is the ledger. A. True B. False

A

The trial balance of Clooney Company had accounts with the following normal balances: Cash $5,000, Revenue $85,000, Salaries and Wages Payable $4,000, Salaries and Wages Expense $40,000, Rent Expense $10,000, Common Stock $42,000; Dividends $15,000; Equipment $61,000. In preparing a trial balance, the total in the debit column is A. $131,000. B. $216,000. C. $91,000. D. $116,000.

A

Which of the following statements about a journal is false? A. It is not a book of original entry. B. It provides a chronological record of transactions. C. It helps to locate errors because the debit and credit amounts for each entry can be easily compared. D. It discloses in one place the complete effect of a transaction.

A

An account is a part of the financial information system and is described by all except which of the following? A. An account has a debit and credit side. B. An account is a source document. C. An account may be part of a manual or a computerized accounting system. D. An account has a title.

B

Posting A. should be performed in account number order B. accumulates the effects of journalized transactions in the individual accounts C. involves transferring all debits and credits on a journal page to the trial balance D. is accomplished by examining ledger accounts and seeing which ones need updating

B

The Dividends account decreases stockholders' equity and is an income statement account like expenses. A. True B. False

B

The Unearned Service Revenue account is a(n) A. asset. B. liability. C. revenue. D. expense.

B

The first step in the recording process is to A. prepare the financial statements. B. analyze each transaction for its effect on the accounts. C. enter in a journal. D. prepare a trial balance.

B

The primary purpose of a trial balance is to A. prove that all transactions have been recorded. B. prove that the debits equal the credits after posting. C. uncover errors in journalizing and posting. D. determine the net income for the year.

B

Which of the following is incorrect regarding a trial balance? A. It proves that the debits equal the credits after posting. B. It proves that the company has recorded all transactions. C. A trial balance uncovers errors in journalizing and posting. D. A trial balance is useful in the preparation of financial statements.

B

Which of the following is not part of the recording process? A. analyzing transactions. B. preparing a trial balance. C. entering transactions in a journal. D. posting transactions.

B

Which of the following statements about an account is true? A. In its simplest form, an account consists of two parts. B. An account is an individual accounting record of increases and decreases in specific asset, liability, and owner's equity items. C. There are separate accounts for specific assets and liabilities but only one account for owner's equity items. D. The left side of an account is the credit or decrease side.

B

A complete journal entry includes all of the following except A. the date of the transaction. B. a brief explanation of the transaction. C. the balance of the accounts in the entry. D. the accounts and amounts to be debited and credited.

C

A credit to a liability account indicates a(n) A. debit was made to an asset account. B. decrease in the liability. C. increase in the liability. D. error.

C

A ledger A. contains only asset and liability accounts. B. should show accounts in alphabetical order. C. is a collection of the entire group of accounts maintained by a company. D. is a book of original entry.

C

An account will have a debit balance if the A. number of debits exceeds the number of credits. B. first transaction posted was a debit. C. total of the debit amounts exceeds the credits. D. last transaction posted was a debit.

C

Credits... A. increase both assets and liabilities. B. decrease both assets and equity. C. increase liabilities and decrease assets. D. decrease both assets and liabilities.

C

Debits... A. increase both assets and liabilities. B. decrease both assets and liabilities. C. increase assets and decrease liabilities. D. decrease assets and increase liabilities.

C

The ledger accounts should be arranged in A. chronological order. B. alphabetical order. C. financial statement order. D. order of appearance in the journal.

C

A trial balance would only help in detecting which one of the following errors? A. A transaction that is not journalized. B. A journal entry that is posted twice. C. Offsetting errors made in recording the transaction. D. A transposition error when transferring the debit side of the journal entry to the ledger.

D

The expanded accounting equation is A. Assets + Liabilities = Common Stock + Dividends + Revenues + Expenses B. Assets = Liabilities + Common Stock + Dividends + Revenues - Expenses C. Assets = Liabilities - Common Stock - Dividends - Revenues - Expenses D. Assets = Liabilities + Common Stock - Dividends + Revenues - Expenses

D

Before posting a payment of $5,000, the Accounts Payable of Senator Company has a normal balance of $16,000. The balance after posting this transaction was A. $21,000. B. $5,000. C. $11,000. D. cannot be determined.

c

On June 1, Diane Leno buys a copier machine for her business and finances this purchase with cash and a note payable. When journalizing this transaction, she will A. prepare two journal entries. B. prepare a simple entry. C. prepare a compound entry. D. list the credit entries first, which is proper form for this type of transactions.

c