COLLEGE ACCT. 3
A cash payment on a loan affects which of the following accounts?
Cash and Notes Payable
A trial balance is a formal business report.
False
Connie made, on account, a purchase of printer paper to last for about three months; this transaction increased Supplies and decreased Accounts Payable.
False
Elysa paid $135 for utilities for her office; this transaction increased Cash and the expense account
False
Equity accounts normally have debit balances.
False
If services for the month total $3,300 in cash and $700 on account, the cash account increases $700.
False
If services for the month total $7,000 in cash and $1,500 on account, the revenue account increases $5,500
False
Kate made a $475 payment on her company van. She should credit Accounts Payable and debit the automobile account.
False
Liability accounts normally have debit balances.
False
Mandy withdraws $600 from her business. This transaction increases cash but decreases owner's equity
False
Revenues decrease owner's equity.
False
Services on account increase a revenue account and increase the cash account.
False
The fact that each transaction has a dual effect on the accounting elements provides the basis for what is called complex-entry accounting.
False
The purchase of a supply of markers for three months should be recorded as an increase in revenue and a decrease in cash.
False
A T account has three parts: the title, the debit side, and the credit side.
True
A credit increases liabilities and owner's equity.
True
A trial balance is a list of all accounts showing the title and balance of each account.
True
A trial balance is taken periodically to check the equality of the debits and credits.
True
An account is a form or record used to keep track of the increases or decreases in the individual assets, liabilities, owner's equity, revenues, and expenses of a business entity.
True
An increase or decrease in any asset, liability, owner's equity, revenue, or expense is always accompanied by an offsetting change within the basic accounting elements.
True
At least two accounts are affected by every transaction.
True
Craig deposited $6,000 in an account to start a new business. He should debit Cash and credit his capital account.
True
Expense accounts normally have debit balances
True
If services for the month total $3,300 in cash and $700 on account, Accounts Receivable increases $700.
True
Increases in owner's equity are entered as credits.
True
John received $350 for delivery services; this transaction increased Cash and revenue
True
Owner's equity includes four types of accounts: Owner's Capital, Revenues, Expenses, and Owner's Drawing.
True
Payment of rent decreases the Cash account.
True
Prepaid Insurance is an asset account.
True
Prepaid insurance and supplies are assets because they will provide benefits for more than one month.
True
The accounting equation must remain in balance.
True
The balance of a T account is on the side with the larger footing.
True
The difference between the footings of an account is called the balance.
True
The owner's capital account normally has a credit balance.
True
The sum of the debits must equal the sum of the credits on the trial balance.
True
The trial balance is used in preparing financial statements.
True
To debit an account is to enter an amount on the left side of the account.
True
When debits equal credits for a transaction, the accounting equation is in balance
True
When services are performed for which payment will be received later, accounts receivable increases
True
Withdrawals of cash and other assets by the owner for personal reasons decrease owner's equity.
Withdrawals of cash and other assets by the owner for personal reasons decrease owner's equity.
A T account has which of the following three major parts?
a title, a debit side, and a credit side
A debit represents an increase in
an asset.
Liability, owner's capital, and revenue accounts normally have
credit balances.
Asset and expense accounts normally have
debit balances.
Accounts that affect owner's equity are
expenses, capital, and revenue.
A debit
is on the left side.
Increases are entered on the credit side of a(n)
liability account.
The drawing account should be used to show
the amount the owner has taken out of the business.
The standard T account includes all of the following EXCEPT
the current date
