Account Chapter 2 Questions

Notes Payable

Liabilities account Credits the Normal Balance

Received cash for services rendered

increases Assets No effect on Liabilities Increases Stockholders Equity

In the first month of operations, the total of the debit entries to the Cash account amounted to $3,000 and the total of the credit entries to the Cash account amounted to $1,800. The Cash account has a

A. $1,800 credit balance B. $3,000 debit balance C. $1,200 debit balance D. $1,800 credit balance Answer: C

At November 1, 20xx, Johnson Inc. had an Accounts Receivable balance of $200,000. During the month, the company made sales on account of $300,000. In addition, Johnson Inc. collected $400,000 from customers that owed them money. At November 30, 2018, the Accounts Receivable balance is

A. $100,000 Debit B. $100,000 Credit C. $500,000 Debit D. $300,000 Credit Answer: A

On July 7, 20xx, Shireman Enterprises received cash $1,400 for services rendered. The entry to record this transaction will icnlude

A. A debit to Service Revenue of $1,400 B. A credit to Accounts Receivable of $1,400 C. A debit to Cash of $1,400 D. A credit to Accounts Payable of $1,400 Answer: C

Which of the following are part of the recording process?

A. Analyzing Transactions B. Entering Transactions in a journal C. Posting journal entries D. All of the above Answer: D

Which of the following describes the classification and normal balance of the Unearned Rent Revenue account?

A. Asset, debit B. Liability, credit C. Revenues, credit D. Expense, debit Answer: B

Powers Corporation received a cash advance of $500 from a customer. As a result of this event.

A. Assets increased by $500 (Debited) B. Equity increased by $500 (Credited) C. Liabilities decreased by $500 (Debited) D. Both assets and equity increased by $500 (Debit and Credited). Answer: A

When a company performs a service but has not yet received payment, it

A. Debits Service Revenue and credits Accounts Receivable B. Debits Accounts Receivable and credits Service Revenue C. Debits Service Revenue and credits Accounts Payable D. Makes no entry until cash is received Answer: B

The primary purpose of the trial balance is to

A. Disclose the complete effect of a transaction in one place B. Make sure a journal entry is not posted twice C. Transfer journal entries to the ledger accounts D. Prove the equality of the debit and credit amounts after posting Answer: D

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. Answer: C

Which of the following accounts is increased with a debit?

A. Land B. Service Revenue C. Interest Payable D. Common Stock Answer: A

Which of the following steps in the accounting process is done after analyzing business transactions?

A. Preparing the Financial statements B. Preparing a trial balance C. Entering transactions in a journal D. Posting journal entries Answer: C

A debit is NOT the normal balance for which accounts listed below?

A. Revenue B. Cash C. Accounts Receivable D. Dividends Answer: A

Which accounts normally have credit balances?

A. Revenues, liabilities, and dividends B. Revenues, liabilities, and assets C. Revenues, liabilities and retained earnings D. Revenues, liabilities, and expenses Answer: C

The right side of a t-account is

A. The balance of an account B. The debit side C. The credit side D. Blank Answer: C

Which of the following statement about an account is true?

A. The right side of an Account is the debit, or increase side B. An account is an individual accounting record of increases and decreases in specific assets, liability, and stockholders equity items C. There are separate accounts for specific assets and liabilities but only one account for stockholders' equity items. D. The left Side of an account is the credit, or decrease side. Answer: B

Supplies

Asset account Debits the Normal Balance

Retained Earnings

Decreased Debit Increases Credit Credits the Normal Balance

Expenses paid in cash

Decreases Assets No Effect on Liabilities Decreases Stockholders Equity

Paid employees' salaries

Decreases Assets No Effect on Liabilities Decreases Stockholders Equity

Dividends paid in cash

Decreases Assets No effect on Liabilities Decreases Stockholders Equity

Service Revenue

Decreases Debit Increases Credit Credits the Normal Balance

Purchased supplies on account

Increases Assets Increases Liabilities No effect on Stockholders Equity

Salaries and Wages

Increases Debit Decreased Credit Debit the Normal Balance

Accounts Receivable

Increases Debit Decreases Credit Debit the Normal Balance

Dividends

Increases Debit Decreases Credit Debits the Normal Balance