accounting ch.2 test

cash, accounts receivable, supplies, prepaid insurance, land, accounts payable, unearned rent, notes payable, capital, drawing, fees earned, wages expense, rent expense, utilities expense, supplies expense, insurance expense, miscellaneous expense

list the order

Joshua Scott invests $40,000 into his new business. How would this transaction be entered in the journal? a.Cash40,000 Joshua Scott, Loan40,000 Invested cash in business. b.Cash40,000 Joshua Scott, Capital40,000 Invested cash in business. c.Joshua Scott, Loan40,000 Cash40,000 Invested cash in business. d.Joshua Scott, Capital40,000 Cash40,000 Invested cash in business.

b.Cash40,000 Joshua Scott, Capital40,000 Invested cash in business.

Gently Laser Clinic purchased laser equipment for $8,500 and paid $2,250 down, with the remainder to be paid later. The correct journal entry would be a.Equipment Expense8,500 Accounts Payable2,250 Cash6,250 b.Equipment8,500 Accounts Payable6,250 Cash2,250 c.Equipment2,250 Cash2,250 d.Cash2,250Accounts Payable6,250 Equipment8,500

b.Equipment8,500 Accounts Payable6,250 Cash2,250

Which group of accounts is comprised of only assets? a.Cash, Accounts Payable, Buildings b.Prepaid Expenses, Buildings, Patents c.Unearned Revenue, Prepaid Expenses, Cash d.Accounts Receivable, Revenue, Cash

b.Prepaid Expenses, Buildings, Patents

Apr.14Equipment 15,000 Cash5,000 Notes Payable10,000 ???????????? Which is the best explanation for this journal entry? a.Purchased equipment with cash. b.Purchased equipment; paid cash of $5,000, with the remainder to be paid in the future. c.Purchased equipment on account. d.Purchased equipment; paid cash of $10,000, with the remainder to be received in the future.

b.Purchased equipment; paid cash of $5,000, with the remainder to be paid in the future.

Which of the following accounts are debited to record increases? a.expenses and liabilities b.assets and expenses c.drawing and liabilities d.assets and liabilities

b.assets and expenses

The process of initially recording a business transaction is called a.closing b.journalizing c.balancing d.posting

b.journalizing

The process of transferring the debits and credits from the journal entries to the accounts is called a.journalizing b.posting c.sliding d.transposing

b.posting

Which of the following owner's equity accounts follows the same debit and credit rules as liabilities? a.drawing accounts only b.revenue accounts only c.expense accounts only d.expense and drawing accounts

b.revenue accounts only

The gross increases in owner's equity attributable to business activities are called a.assets b.revenues c.expenses d.liabilities

b.revenues

An account is said to have a debit balance? a.there are more entries on the debit side than on the credit side b.the amount of the debits exceeds the amount of the credits c.there are more entries on the credit side than on the debit side d.the first entry of the accounting period was posted on the debit side

b.the amount of the debits exceeds the amount of the credits

That the total dollar amount of the debits equals the total dollar amount of the credits in the ledger accounts can be verified through a(n) a.income statement b.trial balance c.balance sheet d.chart of accounts

b.trial balance

A chart of accounts is a.used in place of a ledger b.usually a listing of accounts in financial statement order c.the same as a balance sheet d.usually a listing of accounts in alphabetical order

b.usually a listing of accounts in financial statement order

Which of the following is true about T accounts? a.The right side of a T account is called the debit side. b.Transactions are first recorded in T accounts and then posted to the journal. c.The left side of a T account is called the debit side. d.The left side of a T account is called the credit side.

c.The left side of a T account is called the debit side.

Accounts a.are not used by entities that manufacture products b.do not reflect money amounts c.are records of increases and decreases in individual financial statement items d.are only used by large entities with many transactions

c.are records of increases and decreases in individual financial statement items

A credit signifies a decrease in a.revenue b.capital c.assets d.liabilities

c.assets

In the chart of accounts, the balance sheet accounts are normally listed in which order? a.assets, owner's equity, liabilities b.owner's equity, assets, liabilities c.assets, liabilities, owner's equity d.liabilities, assets, owner's equity

c.assets, liabilities, owner's equity

Which of the following entries records the payment of an insurance premium covering the next year? a.debit Insurance Payable; credit Accounts Receivable b.debit Cash; credit Prepaid Insurance c.debit Prepaid Insurance; credit Cash d.debit Accounts Payable; credit Cash

c.debit Prepaid Insurance; credit Cash

Accounts are classified in the ledger a.alphabetically b.with the accounts used most often listed first c.in accordance with their appearance in the financial statements d.chronologically

c.in accordance with their appearance in the financial statements

In which of the following types of accounts are decreases recorded by debits? a.assets b.drawing c.liabilities d.expenses

c.liabilities

The classification and normal balance of the accounts payable account are a.owner's equity, credit balance b.asset, credit balance c.liability, credit balance d.revenue, credit balance

c.liability, credit balance

A debit signifies a decrease in a.assets b.drawing c.revenues d.expenses

c.revenues

Owner's equity will be reduced by all of the following except a.withdrawals b.expenses c.revenues d.All of these choices

c.revenues

The chart of accounts for Corning Company includes the following: Account NameAccount NumberCash11Accounts Receivable13Prepaid Insurance15Accounts Payable21Unearned Revenue24Corning, Capital31Corning, Drawing32Fees Earned41Salaries Expense54Rent Expense56 Page 3 of the journal contains the following entry: Prepaid Insurance1,530 Cash 1,530 What is the posting reference that will be found in the prepaid insurance account? a.3 b.13 c.11 d.15

a. 3

The chart of accounts for Miguel Company includes the following: Account NameAccount NumberCash11Accounts Receivable13Prepaid Insurance15Accounts Payable21Unearned Revenue24Miguel, Capital31Miguel, Drawing32Fees Earned41Salaries Expense54Rent Expense56 Page 5 of the journal contains the following transaction: Salaries Expense525 Cash 525 What is the posting reference that will be found in the salaries expense account? a.5 b.21 c.11 d.54

a.5

Which of the following accounts would be increased with a credit? a.Accounts Payable; Unearned Revenue; Collins, Capital b.Land; Accounts Payable; Drawing c.Collins, Capital; Accounts Receivable; Unearned Revenue d.Cash; Accounts Receivable; Collins, Capital

a.Accounts Payable; Unearned Revenue; Collins, Capital

Which of the following is not true with a double-entry accounting system? a.Each business transaction will have two debits. b.The sum of all debits is always equal to the sum of all credits in each journal entry. c.The accounting equation remains in balance. d.Every transaction affects at least two accounts.

a.Each business transaction will have two debits.

Which of the following transactions increases owner's equity? a.Provide services on account b.Receive utility bill to be paid next month c.Purchase supplies on account d.Receive cash from customers on account

a.Provide services on account

A credit balance in which of the following accounts would likely indicate an error? a.Salary Expense b.Accounts Payable c.Janet James, Capital d.Fees Earned

a.Salary Expense

A cash payment is recorded in the cash account as a.a credit b.a debit c.either a debit or a credit d.neither a debit nor a credit

a.a credit

Expenses can result from a.consuming services b.purchasing assets c.using up liabilities d.increasing owner's equity

a.consuming services

Which of the following entries records the withdrawal of cash by Sally Anderson, owner of a proprietorship, for personal use? a.debit Sally Anderson, Drawing; credit Cash b.debit Sally Anderson, Capital; credit Cash c.debit Salaries Expense; credit Salaries Payable d.debit Salaries Expense; credit Cash

a.debit Sally Anderson, Drawing; credit Cash

A transaction can first be found in the accounting records in the a.journal b.income statement c.chart of accounts d.balance sheet

a.journal

Which of the following errors will cause the trial balance totals to be unequal? a.posting the debit portion of a journal entry incorrectly when the credit portion of the entry is correctly posted b.failure to record a transaction or to post a transaction c.recording the same transaction more than once d.recording the same erroneous amount for both the debit and the credit parts of a transaction

a.posting the debit portion of a journal entry incorrectly when the credit portion of the entry is correctly posted

Which side of the account increases the cash account? a.neither a debit nor a credit b.credit c.either a debit or a credit d.debit

d. debit

Office supplies purchased by Janer's Cleaning Service on account were returned. Which of the following entries for Janer's Cleaning Service records this transaction? a.Office Supplies, debit; Accounts Receivable, credit b.Cash, debit; Office Supplies, credit c.Office Supplies, debit; Accounts Payable, credit d.Accounts Payable, debit; Office Supplies, credit

d.Accounts Payable, debit; Office Supplies, credit

Which of the following is true about assets? a.Assets are the result of selling products or services to customers. b.Assets include only physical items. c.Assets are the personal property of the owner of the company. d.Assets include both physical and intangible items.

d.Assets include both physical and intangible items.

An overpayment error was discovered in computing and paying the wages of a Jamison Tree Trimming employee. When Jamison receives cash from the employee for the amount of the overpayment, which of the following entries will Jamison make? a.Wages Payable, debit; Wages Expense, credit b.Wages Expense, debit; Cash, credit c.Cash, debit; Wages Payable, credit d.Cash, debit; Wages Expense, credit

d.Cash, debit; Wages Expense, credit

Which of the following abbreviations is correct? a.Debit, "Dr"; Credit, "Cd" b.Debit, "Db"; Credit, "Cr" c.Debit, "Db"; Credit, "Cd" d.Debit, "Dr"; Credit, "Cr"

d.Debit, "Dr"; Credit, "Cr"

In accordance with the debit and credit rules, which of the following is true? a.Debits increase both assets and capital. b.Credits increase assets. c.Credits increase both assets and liabilities. d.Debits increase assets.

d.Debits increase assets.

Which of the following is true regarding normal balances of accounts? a.All accounts have a normal debit balance. b.Accounts that have a normal debit balance will only have debit entries, never credit entries. c.The normal balance of all accounts will have either a positive or negative balance. d.The normal balance is on the increase side of the account.

d.The normal balance is on the increase side of the account.

The balance of an account is determined by a.always subtracting the debits from the credits b.adding all of the debits to all of the credits c.always subtracting the credits from the debits d.adding all of the debits, adding all of the credits, and then subtracting the smaller sum from the larger sum

d.adding all of the debits, adding all of the credits, and then subtracting the smaller sum from the larger sum

Which of the following groups of accounts is increased with a debit? a.assets, revenues, expenses b.assets, liabilities, owner's equity c.assets, liabilities, revenues d.assets, drawing, expenses

d.assets, drawing, expenses

Which of the following entries records the payment of an account payable? a.debit Cash; credit Accounts Payable b.debit Accounts Receivable; credit Cash c.debit Cash; credit Supplies Expense d.debit Accounts Payable; credit Cash

d.debit Accounts Payable; credit Cash

The payment for the monthly rent will require which of the following entries? a.credit Cash and credit Rent Expense b.debit Cash and debit Rent Expense c.credit Rent Expense and debit Cash d.debit Rent Expense and credit Cash

d.debit Rent Expense and credit Cash

May23Cash 22,000 Scott Clark, Capital22,000 Invested cash in business. This journal entry will a.increase Cash and decrease Capital b.increase Capital and decrease Cash c.decrease Cash and decrease Capital d.increase Cash and increase Capital

d.increase Cash and increase Capital

Which of the following types of accounts have a normal credit balance? a.assets and liabilities b.capital and drawing c.liabilities and expenses d.revenues and capital

d.revenues and capital

Expenses follow the same debit and credit rules as a.revenues b.the capital account c.liabilities d.the drawing account

d.the drawing account

Which are the parts of the T account? a.date, debit side, credit side b.title, debit side, total c.title, date, total d.title, debit side, credit side

d.title, debit side, credit side

Which of the following is an internal report that will determine if debit balances equal credit balances in the ledger? a.income statement b.account reconciliation c.chart of accounts d.trial balance

d.trial balance