Accounting chapter 2 questions
All transactions related to a particular item over a period of time are summarized in a(n):
Account
Which of the following accounts would normally have a credit balance?
Accounts Payable, Service Revenue, Common Stock.
Which of the following accounts has a credit balance?
Accounts Payable.
Indicate how to increase and decrease each account listed below by selecting debit or credit.
Accounts Receivable- INC Debit | DEC Credit Equipment- INC Debit | DEC Credit Salaries Payable- INC Credit | DEC Debit Deferred Revenue- INC Credit | DEC Debit Common Stock- INC Credit | DEC Debit
Which of the following accounts would normally have a debit balance and appear in the balance sheet?
Accounts Receivable.
A trial balance can best be explained as a list of
All accounts and their balances at a particular date.
A trial balance can best be explained as a list of:
All accounts and their balances at a particular date.
For each transaction recorded in an accounting system, the basic equation that must be maintained at all times is:
Assets = Liabilities + Stockholders' Equity.
Borrowing cash from the bank would have what effect on the accounting equation?
Assets increase and liabilities increase.
Palmer Corporation borrows $40,000 cash by signing a note with the bank. Which of the following statements correctly shows the effect of this transaction on the accounting equation?
Assets will increase by $40,000, liabilities will increase by $40,000, and stockholders' equity will remain unchanged
Bell Company purchased supplies for $700 cash. Which of the following statements correctly shows the effect of this transaction on the accounting equation?
Assets will remain unchanged, liabilities will remain unchanged, and stockholders' equity will remain unchanged
When cash payments are made to stockholders, what is the effect on the company's accounts?
Cash decreases and dividends increase.
Below is the company's Cash T-account. CashBeg.1,200 5,2003,100 End.3,300 The $5,200 amount could represent which of the following
Collection from customers.
A company pays cash for utilities. The company records this transaction with a:
Credit to Cash
A company bills customers for services provided. The company records this transaction with a:
Credit to Service Revenue
Liabilities normally carry a _______ balance and are shown in the ______________.
Credit; Balance sheet
Revenues normally carry a _______ balance and are shown in the ______________.
Credit; Income statement
Providing services on account would be recorded with a:
Debit to Accounts Receivable.
A company borrows cash from a local bank. The company records this transaction with a:
Debit to Cash
A company purchases supplies for cash. The company records this transaction with a:
Debit to Supplies
Assets normally carry a _______ balance and are shown in the ______________.
Debit; Balance sheet
Expenses normally carry a _______ balance and are shown in the ______________.
Debit; Income statement
Dividends normally carry a _______ balance and are shown in the ______________.
Debit; Statement of stockholders' equity
Incurring an expense for advertising on account would be recorded by:
Debiting an expense account.
An expense has what effect on the accounting equation?
Decrease stockholders' equity.
Receiving cash from customers before services are performed results in:
Deferred Revenues.
After transactions are recorded in the journal, they are posted to the:
General ledger.
Revenues have what effect on the accounting equation?
Increase stockholders' equity.
Providing services to customers for cash would have what effect on the accounting equation?
Increase total assets and total stockholders' equity.
The term commonly used in accounting to describe the format for recording a transaction is:
Journal entry.
In the language of accounting, the term "debit" always means
Left-hand side.
On December 1, Bears Lawn Maintenance, Inc. signed a contract with a retailer to supply maintenance for the next calendar year. How should this transaction be recorded on December 1?
No transaction should be recorded on December 1.
Which of the following transactions causes a decrease in stockholders' equity?
Paying advertising expense for the current month.
Which of the following transactions causes an increase in stockholders' equity?
Provide services to customers on account.
Which of the following transactions increases total liabilities?
Purchase office supplies on account.
Which of the following transactions causes a decrease in total liabilities?
Repay amounts previously borrowed from the bank.
Which of the following accounts has a debit balance?
Salaries Expense.
Which of the following accounts normally has a credit balance?
Service Revenue.
Which of the following accounts normally has a debit balance?
Supplies
Providing services to customers for cash would have what effect on the accounting equation?
Total assets increase; total stockholders' equity increases.
Posting is the process of
Transferring the debit and credit information from the journal to individual accounts in the general ledger.
Which of the following correctly describes a list of accounts and their balances, showing that total debits equal total credits?
Trial balance.
In a journal entry, there are two amount columns: the left-hand column is for debits, and the right-hand column is for credits.
True
A debit is used to increase which of the following accounts?
Utilities Expense.
Receiving cash from an account receivable:
WRONG : Increases an asset and increases revenue.
Below is the company's Cash T-account. CashBeg.1,200 5,2003,100 End.3,300 The $3,100 amount could represent which of the following?
WRONG: Purchase of supplies on account.
A debit is used to decrease which of the following accounts?
accounts payable
Which of the following is not an asset account?
accounts payable
A list of all account names used to record transactions of a company is referred to as the:
chart of accounts
In preparing journal entries, it is acceptable for the amount of total debits to be higher than the amount of total credits.
false
