Chapter 3 -- Self Test Questions

Which of these statements about a journal is false? (a) It contains only revenue and expene accounts (b) It provides a chronogical record of transactions (c) It helps to loacate errors beacuse the debit and credit amounts for each entry can be redily compared (d) It discloses in one place the complete effect of a transaction

(a) It contains only revenue and expene accounts

During 2014, Gibson Company assets decreased $50,000 abd it liabilities decreased $90,000. Its stockholders' equity therefore: (a) increased $40,000 (b) decreased $140,000 (c) decreased $40,000 (d) increased $140,000

(a) increased $40,000 (-50,000=-90,000 +40,000)

A trial balance: (a) is a list of accounts with their balances at a given time (b) proves that proper account titles were used (c) will not balance if a correct journal entry is posted twice (d) proves that all transactions have been recorded

(a) is a list of accounts with their balances at a given time

Which statement about an account is true (a) In its simplesr form, an account consists of two parts (b) An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders equity items (c) There are seperate 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

(b) An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders equity items

Which of the following events is not recorded ub rge accounting records (a) equipment is purchased on account (b) An employee is terminared (c) A cash investment is made into the business (d) Company pays dividend to stockholders

(b) An employee is terminared

Genesis Company buys a $900 machine on credit this transaction will affect the: (a) income statement only (b) balance sheet only (c) income statement and retained earnings statement only (d) income statement, retained earnings statement, and balance sheet

(b) balance sheet only

The effects on the basic accounting equation of performing services for cash are to: (a) increase assets and decrease stockholders equity (b) increase assets and increase stockholders equity (c) increase assets and increase liabilities (d) increase liabilities and increase stockholders equity

(b) increase assets and increase stockholders equity

Which 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) preparing a trial balance

A trial balance will not balance if: (a) a correct journal entry is posted twice (b) the purchase of supplies on account is debited to supplies and credited to Cash (c) a 100 cash divident is debited to Dividends for 1,00 and creditied to Cash for 100 (d) a 450 payment on account is debited to Accounts Payable for 45 and credited to Cash for $45

(c) a 100 cash divident is debited to Dividends for 1,00 and creditied to Cash for 100

Debits: (a) increase both assets (b) decrease both assets and liabilities (c) increase assets and decrease liabilities (d) decrease assets and increase liabilities

(c) increase assets and decrease liabilities

A ledger: (a) contains only asset and liabiltiy accounts (b) should show accounts in alphabetical order (c) is a collection of the netire group of accounts maintained by a company (d) provides a chronlogical record of transaction

(c) is a collection of the netire group of accounts maintained by a company

Whaich accoutns normally have debit balances? (a) Assets, expenses and revenues (b) Assets, expenses and retained earnings (c) Assets, liabilties and dividends (d) Assets, dividends and expenses

(d) Assets, dividends and expenses

Paying an account payable with cash affects the components of the avvounting equation in the following way: (a) Decreases stockholders equity and decreases liabilites (b) Increases assers and decreases liabilities (c) decreases assets and increases stockholders equity (d) decreases assets and decreases liabilities

(d) decreases assets and decreases liabilities

A revenue Account (a) is increased by debits (b) is decreased by credits (c) has a normal balance of debit (d) is increased by credits

(d) is increased by credits

Posting: (a) normally occurs before journalizing (b) transfers ledger transaction data to the journal (c) in an optional step in the recording process (d) transfers journal entries to ledger accounts

(d) transfers journal entries to ledger accounts