Chapter 2 - LO3

Consider the following list of accounts: Revenues, Equipment, Salaries Expense, Accounts Payable, Rent Payable, Prepaid Rent, Utilities Expense, Cash, Common Stock, Dividends How many of these accounts have a normal debit balance?

6 Equipment, Salaries Expense, Prepaid Rent, Utilities Expense, Cash, Dividends

Which of the following statements are true? I. Debits represent decreases, and credits represent increases. II. Credits must always equal debits. III. Liabilities and stockholders' equity have normal credit balances while assets have normal debit balances.

II and III

Which of the following is correct? a) Accounts Receivable is increased with a credit b) Inventories are decreased with a credit c) Rent Payable is increased with a debit d) Rent Expense is increased with a credit

b) Inventories are decreased with a credit

Which of the following is true? a) The debit is on the right side of the account b) The credit is on the right side of an asset account c) The credit is on the left side of a liability account d) The debit is on the right side of the account

b) The credit is on the right side of an asset account

Which of the following is true? a) A debit will increase a liability account b) A credit will increase an asset account c) A credit will increase a revenue account d) A debit will decrease an expense account

c) A credit will increase a revenue account

Which of the following statements is false? a) All T-accounts have both a credit and debit side b) Many times transactions are analyzed using T-accounts c) The right side of a T-account is called the debit side d) The amount in an account at any time is called the balance of the account

c) The right side of a T-account is called the debit side

Debits will: a) decrease liabilities, revenues, and dividends b)increase assets, liabilities, revenues, expenses, and dividends c) increase assets, expenses, and dividends d) decrease assets, liabilities, revenues, expenses, and dividends

c) increase assets, expenses, and dividends