Accounting Test Chapter 3

Debits

increase assets and decrease liabilities

The double-entry system requires that each transaction must be recorded

in at least two different accounts

A debit to an asset account indicates

increase in the asset

The receipt of cash in advance for a customer

increases assets and liabilities

A revenue generally

increases assets and stockholders equity

A revenue account

is increased by credits

A revenue account

is increased with a credit

the dividends account

is increased with debits and decreased with credits

The right side of an account

is the credit side

At the time a company prepays a cost

it debits an asset account to show the service or benefit it will receive in the future.

Which pair of accounts follows the rules of a debit and credit in relation to increases and decreases in the same manner?

Prepaid Insurance and Advertising Expense

Which of the following accounts has a normal credit balance?

Rent Revenue

How do these prepaid expenses expire?

Rent- With the passage of time Supplies -Through use and consumption

Which accounts normally have credit balances?

Revenues, liabilities, and retained earnings.

Which of the following accounts is increased with a credit?

Sales Revenue

A debit is not the normal balance for which account listed below?

Service Revenue

A journal provides

a chronological record of transactions

Recording the adjusting entry for depreciation has the same effect as recording the adjusting entry for

a prepaid expense

An account consists of

a title, a debit side, and a credit side

A T- account

a way of depicting the basic form of an account

After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to

ledger accounts

The primary difference between deferred and accrued expenses is that deferred expenses have

not been incurred and accrued expenses have been incurred

Deferred revenue is revenue that is

not earned but the cash has been recieved

Deferred expenses have

not yet been recorded as expenses

Which of the following is not part of the recording process?

preparing a trial balance

The basic format of a journal would not include a (n)

T-account

Which of the following accounts is increased with a debit?

Dividends

A credit is not the normal balance for which account listed below?

Dividends account

An account is a part of the financial information system and is described by each one of the following except

an account is a source document

Assets normally show

debit balances

In its simplest form, an account consists of all of the following except

explanation column

Which statement about an account is true?

An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items.

If a company issues common stock for 40,000 and uses 30,000 of the cash to purchase a truck

Assets will be increased by 40,000

Which of the following represents the expanded basic accounting equation?

Assets+Dividends+Expenses=Liabilities+common stock+revenues

Which accounts normally have debit balances?

Assets, expenses, and dividends.

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

Liability, credit

Evidence that would not help with determining the effects of a transaction on the accounts would be an

advertising brochure

Adjustments are often prepared

after the balance sheet date, but dated as of the balance sheet date.

The usual sequence of steps in the recording process is to

analyze each transaction, enter the transaction in the journal, and transfer the information to the ledger accounts

The first step in the recording process is to

analyze the transaction in terms of its effect on the accounts

The usual sequence of steps in the transaction recording process is

analyze, journalize, post to the ledger

The usual sequence of steps in the transaction process is

analyze, journalize, post to the ledger.

If a company buys a 700 machine on credit, this transaction will affect the

balance sheet only

Accrued Expenses have

been incurred, not paid, and not recorded

Accrued expenses have

been incurred, not paid, and not recorded

In the first month of operations, the total of the debit entries to the Cash account amounted to $1,400 and the total of the credit entries to the Cash account amounted to $800. The Cash account has a

c. $600 debit balance. X Solution: $1,400 dr. - $800 cr. = $600 dr. d. $600 credit balance.

An account will have a credit balance if the

credits exceed the debits.

A paid dividend

decreases assets and stockholders equity

The best interpretation of the word "credit" is the

right side of an account

The normal balance of any account is the

side which increases that account

In recording accounting transactions, evidence that a transaction has taken place is obtained from

source documents

The classification and normal balance of the Dividends account is

stockholders equity with a debit balance

Which of the following describes the classification and normal balance of the Retained Earnings account?

stockholders equity, credit

In recording an accounting transaction in a double-entry system

the amount of the debits must equal the amount of the credits

An accountant has debited an asset account for 1,000 and credited a liability account for 500. What can be done to complete the recording of the transaction?

the amount of the debits must equal the amount of the credits.

The left side of an account is

the debit side

Which one of the following is not a part of an account

trial balance

Using accrual accounting, revenue is recorded and reported only

when the services are rendered without regard to when cash is received