CH3-Analyzing Transactions Using T-Accounts

The current balance in the cash account of Williams Company is $942. Which of the following figures, if included on the trial balance as the cash account balance, would represent a transposition error?

$924

The current balance in the cash account of Williams Company is $953. Which of the following figures, if included on the trial balance as the cash account balance, would represent a transposition error?

$935.00

When the trial balance totals are not equal, the error may have been caused by recording a debit as a credit if the difference is divisible by:

2

If the trial balance totals are not equal, the error may have been caused by a transposition if the difference is evenly divisible by:

9

If the trial balance totals are not equal, this may have been caused by a transposition error if the difference is divisible by:

9

When revenue is earned, which of the following would not be a common result of the transaction?

A credit to the Accounts Payable account

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

Accounts Payable

Which of the following accounts would decrease on the debit side of the T account?

Accounts Payable

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

Debit Accounts Payable; Credit Cash

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

Debit Accounts Receivable; Credit Fees Income

A business performed $8,000 of services. Their customer paid $3,000 of the amount right away but charged the remaining amount. To record this transaction, the business would:

Debit Cash $3,000 and Debit Accounts Receivable $5,000 and Credit Fees Income $8,000

A business performed $8,600 of services. Their customer paid $3,900 of the amount right away but charged the remaining amount. To record this transaction, the business would:

Debit Cash $3,900 and Debit Accounts Receivable $4,700 and Credit Fees Income $8,600

A business purchases equipment costing $5,500. They pay $1,500 right away and charge the remaining amount. To record this transaction, the business would:

Debit Equipment $5,500; Credit Cash $1,500 and Credit Accounts Payable $4,000

A business purchases equipment costing $9,200. They pay $1,200 right away and charge the remaining amount. To record this transaction, the business would:

Debit Equipment $9,200; Credit Cash $1,200 and Credit Accounts Payable $8,000

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

Debit Supplies; Credit Accounts Payable

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

Debiting Utilities Expense; Crediting Accounts Payable

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

Expenses and assets

A debit has the same impact on expenses and liabilities

False

All owner's equity accounts increase via a credit.

False

All temporary accounts are either asset or liability accounts.

False

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

False

Another name for temporary accounts is real accounts.

False

Every transaction must involve either a liability or an owner's equity account.

False

Increases in assets and revenue are both recorded with debits.

False

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

False

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

False

Within the chart of accounts numbers are assigned to accounts based on their frequency of use, with the most commonly-used accounts assigned the lowest numbers.

False

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

Fees Income and John Smith, Capital

When using a T account to determine an account balance, which of the following statements is incorrect?

The balance always appears on the side of the T account on which the account increases.

Which of the following statements is accurate?

The income statement contains only temporary accounts

Which of the following statements is accurate regarding the withdrawal of cash by the owner of a company?

The withdrawal leads to a decrease in owner's equity

A business transaction must affect at least two accounts.

True

A debit to a withdrawal account will reduce owner's equity.

True

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

True

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

True

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

True

Financial statements are prepared after the trial balance is prepared.

True

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

True

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

True

Temporary accounts begin each period with a balance of $0.

True

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

True

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

True

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

True

The classification and normal balance of the accounts payable account is _________ .

a liability with a credit balance.

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

accounts

When are the financial statements prepared?

after the trial balance is prepared

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

an asset with a debit balance.

Debits are used to record increases in:

assets and expenses.

The difference between the debit and credit side of a T account is called the account ____________________.

balance

The account Moriah Paige, Capital, would appear on both the Statement of Owner's Equity and the__________________.

balance sheet

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

balance sheet

What type of account is listed first within the chart of accounts?

balance sheet accounts

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

check the addition of each column.

An entry on the right side of a T account is called a(n) ____________________.

credit

The right side of a T account is referred to as the ____________________ side of an account.

credit

Rent Revenue is increased by _________________ the account.

crediting

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

debit

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

debit

Expense accounts are increased on the ____________________ side of the T account.

debit

Modern products paid cash to a creditor. To record this transaction, the accountant would:

debit Accounts Payable and credit Cash

Select the entry below to record the receipt of previously-owed cash from a customer.

debit Cash, and credit Accounts Receivable

Carpet Co. paid cash to purchase equipment. To record this transaction, the accountant would:

debit Equipment and credit Cash.

A firm purchased furniture on account. To record this transaction, the accountant would:

debit furniture and credit accounts payable

The ABC Company paid cash on account for supplies purchased last month. This would be recorded in the T-accounts as a:

debit to Accounts Payable and credit Cash.

The trial balance includes which of the following column titles?

debit, credit

When cash is spent to purchase supplies, the accountant:

debits an asset account and credits an asset account

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.

drawing

When equipment is purchased for cash, the cash account is credited and the ____________________ account is debited.

equipment

A small pencil figure written at the base of an amount column showing the sum of the entries in the column is called a ____________________.

footing

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

income statement

Which of the following account types are listed last within the chart of accounts?

income statement accounts

Debits are used to record:

increases in assets.

Credits are used to record:

increases in liabilities and revenues.

The total of the figures on the left side of a Cash T account is $26,800. The total of the figures on the right side is $14,300. The balance of this account:

is $12,500 and would be recorded on the left side of the T account.

The total of the figures on the left side of a Cash T account is $36,700. The total of the figures on the right side is $16,250. The balance of this account:

is $20,450 and would be recorded on the left side of the T account.

When recording a transaction in a T account, which of the following is not accurate?

it is not necessary to record a credit for every transaction

The three financial statements are linked together because the:

net income from the income statement is used on the statement of owner's equity and the ending balance of the capital account, computed on the statement of owner's equity, is used on the balance sheet.

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

normal

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

on the left side of the Cash account and the right side of the Accounts Receivable account.

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

revenue

The normal balance of an account is the:

side of the T account on which it increases.

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

slide

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

slide

Revenue and expense accounts are called ____________________ accounts.

temporary

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

the fees income account.

The error that occurs when the number $916 is written as $961 is called a(n) ____________________ error.

transposition

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

trial balance