Chapter 2

Prepaid expenses would appear on which financial statement? A. balance sheet B. income statement C. owner Equity Statement D. None of these answers is correct.

A. Balance sheet

Which type of account would NOT be reported on the income statement: A. Liabilities A. Revenue C. Expenses D. none of these answers is correct

A. Liabilities

Which of the following is prepared first? A. Trial balance B. Income statement C. Balance sheet D. Statement of owner's equity

A. Trial Balance

When recording transactions in two ore more accounts and the totals of the debits and credits are equal, it is called A. donut-entry bookkeeping B. debiting C. balancing D. crediting

A. double-entry bookkeeping

A debit may signify a(n): A. increase in asset accounts B. decrease in expense accounts C. increase in the revenue account D. increase in liability accounts

A. increase in asset accounts

The side that increases the account balance, by the rules of debit and credit is said to be the : A. normal balance B. debit side C. credit side D. none of these are correct

A. normal balance

A debit to an expense account was posted as a debit to a revenue account. this error would cause: A. revenue to be understated. B. liabilities to be overstated. C. assets to be overstated. D. none of the above is correct

A. revenue to be understated

The income statement contains A. revenues B. liabilities C. assets D. both B and C are correct

A. revenues

Net income or net loss for a period is calculated by the following formula: A. total revenues- total expenses B. total revenues - total expenses - total withdrawals + assets C. total revenues - total liabilities D. total revenues - total expenses + capital

A. total revenues - total expenses

Which type of account would NOT be reported on the balance sheet? A. cash B. expense C. accounts Payable D. Equipment

B. Expense

A debit to a liability account was posted as a debit to the Capital account. This error would cause: A. capital to be overstated B. Liabilities to be overstated C. assets to be overstated D. none of the above

B. Liabilities to be overstated

Which of the following is prepared last? A. income statement B. trial balance C. balance sheet D. statement of owner's equity

C. Balance sheet

Which of the following is not a financial statement? A. Statement of owner's equity B. Balance sheet C. Trial balance D. Income statement

C. Trial balance

A credit may signify a(n): A. increase in assets B. increase in withdrawals C. increase in revenue D. decrease in liabilities

C. increase in revenue

A formal account that has columns for date, explanation, posting reference, debit, and credit is called the: A. T account B. ledger C. standard account form D. Chart of accounts

C. standard account form

An asset would be debited and a liability credited if: A. the business bought supplies for cash B. the business incurred an expense and paid it C. the business bought equipment on account D. None of these is correct

C. the business bought equipment on account

On which financial statement would you find the ending balance in the capital account? A. income statement B. Balance Sheet C. Statement of Owner's Equity D. Both B and C are correct.

D. Bothe B and C are correct

A list of all the accounts from the lager with their ending balances is called a: A. chart of accounts B. bank statement C. normal balance D. trial balance

D. Trial Balance

which of the following types of accounts has a normal debit balance? A. withdrawals B. assets C. expenses D. all of these answers are correct

D. all of the answers are correct

Which of the following types of accounts has a normal credit balance? A. assets B. withdrawals C. expenses D. revenues

D. revenues

True or False Accounts Payable appears on the income statement

False

True or False Accounts Payable is an asset account that is increase d on the credit side

False

True or False Withdrawals and expenses are reported on the incomes statement

False

T/F The debit side is always the left side of the account

True

True or False Double- entry accounting requires transactions to affect two or more accounts, and the total of the debits and credits must equal.

True

True or False Two accounts are affected in every transaction.

True

True or False Cash is credited when the business makes a payment for supplies

True

True or False The Sid e of an account that increases the balance is always the same as the normal balance side

True