Chapter 3 Concepts

True or false: When analyzing a transaction using a T account, increases for all accounts are shown on the left-hand column. True false question.

False

True or false: A list of the accounts used by a business to record financial transactions is called the trial balance.

False A list of accounts used by a business to record its financial transaction is called the chart of accounts.

Fill in the blank question. A company purchased office supplies for $500 in cash. This transaction would debit the __________ account, and credit the __________ account.

supplies; cash

Identify which of the following correctly describes a T-Account. Referred to as a T-account because of its relationship to transactions. Increases to accounts are recorded on the left hand column. Accountants use T accounts to analyze transactions. Consists of a vertical line and a horizontal line that resembles the letter T. The name of the account is written on the horizontal (top) line.

Accountants use T accounts to analyze transactions. Consists of a vertical line and a horizontal line that resembles the letter T. The name of the account is written on the horizontal (top) line.

Identify which of the following correctly describes a T-Account. (Check all that apply). - The name of the account is written on the horizontal (top) line. - Referred to as a T-account because of its relationship to transactions. - Increases to accounts are recorded on the left hand column. - Accountants use T accounts to analyze transactions. - Consists of a vertical line and a horizontal line that resembles the letter T.

The name of the account is written on the horizontal (top) line. Accountants use T accounts to analyze transactions. Consists of a vertical line and a horizontal line that resembles the letter T.

True or false: Permanent accounts, such as accounts receivable, are kept open from one accounting period to the next.

True

Black Consulting Company purchased equipment for $5,000. This amount is to be paid in 60 days. This transaction would be recorded with a credit entry to the ________ account. equipment equipment expense accounts payable cash

accounts payable

Speedy Delivery Company completed a delivery and billed the customer for $980. This transaction would be recorded with a debit entry on the left-hand side of which account: fees income accounts receivable delivery expense cash

accounts receivable

Speedy Delivery Company completed a delivery and billed the customer for $980. This transaction would be recorded with a debit entry on the left-hand side of which account: fees income delivery expense accounts receivable cash

accounts receivable

Which of the following are correct steps to calculate the balance of an account? record the balance on the side that has the smaller total add the figures on each side of the account enter the total in small pencil figures called a footing add the two footing balances together

add the figures on each side of the account enter the total in small pencil figures called a footing

Identify the correct statements: assets increase on the left (debit) side owner's equity decrease on the left (debit) side liabilities decrease on the right (credit) side liabilities increase on the right (credit) side

assets increase on the left (debit) side owner's equity decrease on the left (debit) side liabilities increase on the right (credit) side

The owner's capital account appears on which two financial statements? income statement balance sheet statement of owner's equity

balance sheet statement of owner's equity

Helen Jone's Hair Salon collects $800 cash for services provided during the day. This transaction would be recorded with a debit entry on the left-hand side of which account: accounts receivable fees income Helen Jone's, Capital cash

cash

Identify which of the following accounts are permanent accounts: cash wages expense withdrawals accounts payable prepaid rent

cash accounts payable prepaid rent

A list of the accounts used by a business to record its financial transactions is called the _________________. chart of accounts T account trial balance double-entry system

chart of accounts

An entry on the right-hand side of a T account is called a: debit credit increase decrease

credit

A company collected $200 cash from customers for services provided. This transaction would (debit/credit) _________ the fees earned account, and debit/credit ___________ the cash account.

credit; debit

A company purchased equipment for $2,000 in cash. This transaction would (debit/credit) __________ the cash account, and (debit/credit) ___________ the equipment account.

credit; debit

A company completed services and billed customers for $800. This transaction would (debit/credit) ____________ the accounts receivable account, and (debit/credit) ____________ the fees income account.

debit; credit

A(n) (increase/decrease) _________ to the supplies account is shown on the right-hand side of the T account.

decrease

A(n) (increase/decrease) __________ to the fees earned account is shown on the left-hand side of the T account.

decrease

A(n) (increase/decrease) _____________ to the cash account is shown on the right-hand side of the T account.

decrease

An (increase/decrease) ___________ to the accounts receivable account is shown on the right-hand side of the T account. Listen to the complete question

decrease

A special type of owner's equity account set up to record the owner's withdrawal of cash from the business is called the ___________ account.

drawing

A special type of owner's equity account set up to record the owner's withdrawal of cash from the business is called the ___________ account. drawing capital equity

drawing

Identify the correct steps to prepare a trial balance: list the accounts names in alphabetical order sum the total debits with total credits enter the ending balances of each account in the appropriate debit or credit column enter the trial balance heading total the debit column; total the credit column

enter the ending balances of each account in the appropriate debit or credit column enter the trial balance heading total the debit column; total the credit column

Turner Company purchased equipment for $2,500 in cash. This transaction would increase the _________ account: equipment purchases cash equipment expense

equipment

A company purchased equipment for $2,000 on account. The balance is due in 90 days. This transaction would debit the _____________ account, and credit the ____________ ___________ account.

equipment; accounts payable

A(n) (increase/decrease) ___________ to the accounts payable account is shown on the right-hand side of the T account. Listen to the complete question

increase

A(n) (increase/decrease) ____________ to an owner's capital account is shown on the right-hand side of the T account.

increase

A(n) (increase/decrease) ______________ to the equipment account is shown on the left-hand side of the T account.

increase

Debit entries are always made on the (left/right) __________-hand side of a T account.

left

The equipment account is always increased on the (left/right) ________-hand side of the T account.

left

The supplies account is always increased on the (left/right) ________-hand side of the T account.

left

The steps to analyze the effects of a business transaction include (select all that apply): make the entry in T-account form analyze the financial event apply the high-low rules for each account affected

make the entry in T-account form analyze the financial event

Identify the correct statement about the accounting equation: owner's equity increases on the right (credit) side assets increase on the right (credit) side liabilities increase on the left (debit) side

owner's equity increases on the right (credit) side

Net income appears on which two financial statements? statement of owner's equity income statement balance sheet

statement of owner's equity income statement

Fancy Painting Company purchased office supplies for $500 in cash. This transaction would be recorded with a debit to the _______ account. supplies accounts payable cash supplies expense

supplies

A statement that lists all accounts and related balances, that is prepared after transactions have been recorded, and which tests the accuracy of total debits and total credits is called the _____________. trial balance double-entry system balance sheet chart of accounts

trial balance

A statement to test the accuracy of total debits and credits after transactions have been recorded is called the __________ _________.

trial balance