accounting midterm

An awareness of the normal balances of accounts would help you spot which of the following as an error in recording?

A credit balance in an expense account

An account is a part of the financial information system and is described by all except which one of the following?

An account is a source document.

Which of the following is the correct sequence of steps in the recording process?

Analyzing, journalizing, posting

The basic accounting equation may be expressed as

Assets = Liabilities + Owner's Equity.

Which of the following correctly identifies normal balances of accounts?

Assets-Debit Liabilities-Credit Owner's Equity-Credit Revenues-Credit Expenses-Debit

Which of the following rules is incorrect?

Debits increase the owner's capital account.

Which of the following statements is not true?

Expenses increase owner's equity.

The private sector organization involved in developing accounting principles is the

Financial Accounting Standards Board.

GAAP stands for

Generally Accepted Accounting Principles.

A debit is not the normal balance for which of the following?

Owner's Capital account

An account consists of

a title, a debit side, and a credit side.

A T-account is

a way of depicting the basic form of an account.

For the basic accounting equation to stay in balance, each transaction recorded must

affect two or more accounts.

A debit to an asset account indicates

an increase in the asset.

liabilities

are existing debts and obligations.

If total liabilities increased by $6000, then

assets must have increased by $6000, or owner's equity must have decreased by $6000.

If expenses are paid in cash, then

assets will decrease.

An account is an individual accounting record of increases and decreases in specific

assets, liabilities, and owner's equity items.

A balance sheet shows

assets, liabilities, and owner's equity.

Liabilities of a company are owed to

creditors

An account will have a credit balance if the

credits exceed the debits.

credits

decrease assets and increase liabilities.

Debits

decrease liabilities and increase assets.

When an owner withdraws cash or other assets from a business for personal use, these withdrawals are termed

drawings

A net loss will result during a time period when

expenses exceed revenues.

The accounting process is correctly sequenced as

identification, recording, communication.

The starting point of the accounting process is

identifying economic events

The double-entry system requires that each transaction must be recorded

in at least two different accounts.

A business organized as a corporation

is owned by its stockholders.

Which account below is not a subdivision of owner's equity?

liabilities

Mellon Company purchases $1500 of equipment from Office Equipment Inc. for cash. The effect on the components of the basic accounting equation of Mellon Company is

no change in total assets.

The economic entity assumption requires that the activities

of an entity be kept separate from the activities of its owner.

Owner's capital at the end of the period is equal to

owner's capital at the beginning of the period plus net income minus drawings.

Owner's equity can be described as

ownership claim on total assets.

A small neighborhood barber shop that is operated by its owner would likely be organized as a

proprietorship

The proprietorship form of business organization

represents the largest number of businesses in the United States.

Owner's equity is increased by

revenues

The best interpretation of the word credit is the

right side of an account.

The normal balance of any account is the

side which increases that account.

In recording an accounting transaction in a double-entry system

the amount of the debits must equal the amount of the credits.

The right side of an account

the credit side

The left side of an account is

the debit side

Accountants refer to an economic event as a

transaction

Which one of the following is not a part of an account?

trial balance

Accountants record both internal and external transactions.

true

The purchase of office equipment on credit increases total assets and total liabilities.

true