Accounting 1 Ch 2 P 1 Smartbook
Which of the following accounts has a normal credit balance?
- Unearned consulting revenue - Accounts payable - Common stock
Which of the following items would be considered "cash" and reflected in a company's Cash account?
- Checks - Coins - Money orders
Which of the following accounts are examples of expenses?
- Supplies expense - Rent expense
Choose the account(s) below, that would have a normal credit balance.
- Unearned Revenues - Revenues - Accounts Payable - Common Stock
All of the following are examples of accrued liabilities:
- interest payable - wages payable - taxes payable
To enter transactions on the right side of a T-account means you will __________ (debit/credit) the account and will cause a(n) __________ (decrease/increase) in a liability account.
Blank 1: credit Blank 2: increase
Which of the following accounts has a normal debit balance?
- Buildings - Accounts receivable - Supplies - Cash
Which of the following statements is accurate regarding the Building account?
A Building asset account is used to record the costs of purchasing a store, office, warehouse or factory.
Which of the following statements is the best definition of an asset? Multiple choice question.
Assets are resources owned or controlled by a company and that have expected future benefits.
The stockholders of a business received a $1000 dividend. How would this affect the total equity of the business?
Assets would be decreased and total equity would decrease as well.
True or false: The cost of land owned by a business is recorded in the Land account and this account is classified as an expense.
False
When the product or service related to an unearned revenue is delivered, the earned portion of the unearned revenue is transferred to a _____ account.
revenue
Which of the following are examples of prepaid (expense) accounts?
- Prepaid rent - Prepaid insurance
Which of the following statements is (are) correct regarding the Common Stock account?
- The Common Stock account is used to record investments by the owner. - The Common Stock account is an equity account. - The Common Stock account is increased on the right side of the T-account.
Which of the following statements is (are) correct regarding the effect of debiting or crediting accounts?
- To decrease an asset, you would credit it. - To increase an expense account, you would debit it. - To increase the Withdrawals account, you would debit it. - To reduce Cash, you would credit it. - To reduce Accounts payable, you would debit it
Which of the following statements is (are) correct regarding a T-account?
- A T-account will show the debit and credit effects of transactions. - A T-account represents a ledger account. - A T-account may be used as a tool to visualize the effects of a transaction.
Select the statements that are true regarding debiting and crediting.
- A credit will always decrease an asset account. - A debit or a credit can increase or decrease an account, depending on the account. - A debit can increase an expense account. - For an account where a debit is an increase, the credit is a decrease.
Which of the following statements is (are) correct regarding the definition of a liability?
- A liability can be settled by transferring assets or providing products or services to others. - A liability is a debt owed by the business. - A liability is a claim by creditors against the assets of a business.
Given the descriptions below, which is (are) true regarding notes receivable?
- Another name for a note receivable is a promissory note. - It is the promise of another entity to pay a specific sum of money on a specified future date. - Notes receivable is classified as an asset.
Which of the following statements is (are) correct regarding the sides of a T-account?
- Asset accounts will be increased on the left side. - The left side is called the debit side. - Liability accounts will be increased on the right side. - The right side is called the credit side.
Which of the following accounts impact equity?
- Common Stock - Expenses - Revenue - Dividends
Which of the following statements is (are) correct?
- Crediting the Common Stock account means to increase it. - Crediting a liability account will increase it. - Crediting means to enter transactions on the right side of a T-account.
Which of the following statements about the Dividends account is (are) correct?
- Dividends decrease equity. - Dividends is increased when assets are paid to the owners. - Dividends is used to record distributions of assets to the owners of a business.
When the stockholders receive a dividend, how would this affect the equity of a business?
Assets are decreased and equity is decreased.
Jeff, the owner of a business, invests an additional $100 into his business. How would this affect the equity of his business?
Common Stock would be increased and total equity would also increase.
Simon, the owner of a business, invests $10,000 in his new business, Simon's Sports. How would this affect the equity of a business?
Common Stock would be increased, so equity is increased.
Which of the following statements about the Dividends account is (are) correct?
- Dividends is used to record distributions of assets to the owners of a business. - Dividends are increased on the left side of the T-account. - Dividends decrease equity.
Which of the following statements is (are) accurate regarding equipment purchased within a business?
- Equipment is reported on the left side of the accounting equation. - Equipment cost is initially recorded as an asset and the cost is allocated over time to expense. - Equipment is an asset. - Equipment purchases are reported on the balance sheet.
Which of the following accounts are examples of revenues?
- Fees earned - Service revenue - Sales
The Notes payable account is a(n) __________ (asset/liability/expense) account and is increased on the __________ (left/right) side of the T-account.
- liability - right
Which statement best describes a T-account?
A T-account represents a ledger account and is a tool used to understand the effects of one or more transactions.
Which statement is correct regarding entering transactions into the accounting equation?
If the total of the right side of the accounting equation increased, then the total of the left side of the accounting equation must also increase.
Which of the following statements is (are) correct regarding unearned revenues?
- Unearned revenue is a liability account which is set up when a customer pays in advance for a product or service. - Unearned revenues refer to a liability that is settled when a company delivers a product or performs a service.
Which of the following statements are accurate regarding supplies?
- Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies. - Supplies are assets until they are used. - When supplies are purchased, they are added to the Supplies account. - Unused supplies are treated as assets.
It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account
A chart of accounts
Which of the following statements is correct in regards to debiting and crediting an account?
A debit or a credit can increase an account, depending on what kind of account it is.
It is a collection of all accounts with their activity and balances that exist in a business.
A general ledger
It is a book of original entry that includes a chronological record of all transactions that have occurred within a business during a period occurred
A journal
Which of the following statements is the correct definition of a liability?
A liability is a claim by a creditor against the assets of a business.
The correct definition of an "account" includes which of the following?
A record of increases and decreases in a specific asset, liability, equity, revenue, or expense item
It is a list of each account and its balance at any given time and is used to verify that debits = credits
A trial balance
Which of the following statements is accurate regarding Accounts payable?
Accounts payable refer to promises to pay later, which may arise from the purchase of supplies or services.
Which of the following formulas is correct in depicting the expanded accounting equation?
Assets = Liabilities + Common stock - Dividends + Revenues - Expenses
Dividends of $50 are paid to the shareholders of a company. How would this affect the equity of a business?
Assets are decreased and equity is decreased.
The expanded accounting equation is: __________ = __________ + common stock + __________ - __________ - dividends. Do not include the word "account(s)" in your answers. Note: order of the equation is important.
Blank 1: assets Blank 2: liabilities Blank 3: revenues or revenue Blank 4: expenses
The T-account for Accounts payable had 4 transactions entered into it. It was increased by $300 and by $100 and decreased by $50 and by $150, respectively. Its balance at the end of the period would be a (debit/credit) __________ balance of $__________.
Blank 1: credit Blank 2: 200
The T- account for Cash had 3 transactions entered into it. It was increased by $400 and decreased by $100 and by $30, respectively. Its balance at the end of the period would be a (debit/credit) __________ balance of $__________.
Blank 1: debit Blank 2: 270 or $270
The account title is shown at the top of a T-account. The left side of a T-account is called the ___________ side, and the right side is called the __________ side.
Blank 1: debit Blank 2: credit
To enter transactions on the left side of a T-account means you will __________ (debit/credit) the account and will cause a(n) __________ (decrease/increase) in an asset account.
Blank 1: debit Blank 2: increase
Since expenses are the costs of doing business and cause equity to __________ (increase/decrease), expenses are increased on the __________ (right/left) side of their T-account.
Blank 1: decrease Blank 2: left
The Dividends account is used to record __________ (investments/dividends/expenses/revenues) by the owner and has a __________ (positive/negative) impact on equity.
Blank 1: dividends Blank 2: negative
Revenues cause equity to __________ (decrease/increase) and they are increased on the __________ (left/right) side of the T-account.
Blank 1: increase Blank 2: right
The rules of double-entry accounting say that for each transaction at least __________ accounts are involved, with at least one debit and one ___________.
Blank 1: two Blank 2: credit
Identify which of the following lists include only examples of assets.
Building, Cash, Accounts receivable
Cash can take many forms. From the lists of items below, choose the one which includes only items that would be defined as cash.
Coins, checks, money orders
There are several types of accounts that impact equity. Which of the accounts below cause equity to increase?
Common Stock and Revenues
Jeff, a shareholder of a business, received dividends of $100. How would this affect the total equity of the business? Multiple choice question.
Dividends would be increased and total equity would decrease as well.
Which of the following statements is the correct definition of equity?
Equity is the owner's claim on a company's assets.
Which of the following statements is correct regarding expenses.
Expenses are increased on the left side of their T-account because they decrease equity.
A business pays $500 for rent. How would this payment affect the equity of a business?
Expenses are increased, so equity is decreased.
Which of the following statements is correct regarding the effect of debits and credits in accounts?
Expenses reduce equity, so to increase an expense account you would debit it.
The business receives and immediately pays a $300 advertising bill. How would this payment affect the total equity of a business?
Expenses would be increased, so equity is decreased.
Which set of accounts below would have a normal debit balance?
Expenses; Dividends; Cash
True or false: Assets are claims (by creditors) against the company.
False
From the lists of accounts below, which one contains only revenue accounts?
Interest revenue, Professional fees earned, Sales
Which of the following statements is the best definition of the Chart of Accounts?
It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.
Which of the following statements is correct about prepaid accounts
Prepaid accounts are also called prepaid expenses and are considered assets.
Select the statement below that best defines prepaid accounts.
Prepaid accounts are assets that represent prepayments of future expenses.
Which of the following statements is correct about prepaid expenses?
Prepaid expenses are also called prepaid accounts and are considered assets.
Which of the following lists of items contain only examples of prepaid (expense) accounts?
Prepaid rent, prepaid insurance
From the following lists of accounts, choose the list(s) which contains only expense accounts.
Rent expense, wages expense, insurance expense
Which of the following statements about revenues is correct?
Revenues cause equity to increase, and they are increased on the right side of the accounting equation.
The business earns $700 of consulting revenue. How would these earnings affect the total equity of a business?
Revenues increase, so total equity is increased.
The business earns $2,800 cash for services performed. How would this receipt affect the total equity of a business?
Revenues would be increased, so equity is increased.
Which of the following describes a general ledger?
The general ledger is a record containing all accounts used by a company.
Which of the following statements is correct?
To debit an account means to enter transactions on the left side of a T-account.
Which of the following statements best describes the purpose of the Owner, Capital account?
When an owner invests in a business, the invested amount is recorded in the Common Stock account
Notes receivable is considered a(n) __________ (asset/liability).
asset
An account is a record of increases and __________ in a specific asset, liability, equity, revenue or expense.
decreases
Accrued liabilities are amounts owed that are not yet __________
paid
Which of the following statements is (are) correct regarding the Notes payable account?
- Notes payable is a liability account. - Notes payable is a formal promise to pay a certain sum of money on a specified future date. - Notes payable is reported on the balance sheet.
Which of the following accounts would be considered an asset?
- Supplies - Accounts receivable - Building - Cash
Which of the following statements is accurate about the Land account?
- The Land account is used to record the costs of land purchased by the business. - The Land account is an asset. - The Land account is increased on the left side of its T-account.
Which of the following are accurate statements regarding how to report or treat prepaid accounts?
- The expired portion of prepaid accounts is reported on the income statement as an expense. - The unexpired portion of prepaid accounts are treated as assets. - Over time, the expired portion of prepaid accounts is removed from the account and reported as an expense.
The Building account is a(n) __________ (asset/liability/expense) account and is reported on the __________ (left/right) side of the accounting equation.
- asset - left
Equipment is a(n) ___________ (asset/liability/expense) account. It is reported on the __________ (left/right) side of the accounting equation and is __________ (increased/decreased) when equipment is purchased.
- asset - left - increased
When financial statements are prepared, unexpired prepaid accounts are recorded as __________ (expenses/assets/liabilities) and the expired portion of the prepaid account is reported as a(n) __________ (expense/asset/liability).
- assets - expense
When financial statements are prepared, unexpired prepaid accounts are recorded as ____________ (expenses/assets/liabilities) and the expired portion of the prepaid account is reported as a(n) __________ (expense/asset/liability).
- assets - expense
Supplies are __________ (assets/expenses/liabilities) until they are used. When they are used up, their costs are reported as __________ (assets/expenses/liabilities).
- assets - expenses
Supplies are ___________ (assets/expenses/liabilities) until they are used. When they are used up, their costs are reported as __________ (assets/expenses/liabilities).
- assets - expenses
Accounts payable refer to obligations owed __________ (by/to) the business and are classified as a(n) __________ (asset/liability/expense) account.
- by - liability
The Notes payable account is a(n) __________ (asset/liability/expense) account and is increased on the ___________ (left/right) side of the T-account.
- liability - right
The general ledger can be used to determine which of the following
- which accounts are being used by a company and their balances at any given time. - increases and decreases in all accounts in a business. - common and unique accounts used by a business.