Accounting Chapter 4 Test
List the steps used to analyze transactions that will help you record them properly.
1. Identify the accounts affected. 2. Classify the accounts affected. 3. Determine the amount of increase or decrease for each account affected. 4. Which account is debited? For what amount? 5. Which account is credited? For what amount? 6. What is the complete entry in T-account form? Account Name Account Name ____________ ____________
A chart of accounts is limited to 50 accounts.
False
A credit to an account always increases it; a debit to an account always decreases it.
False
An asset account appears on the right side of the accounting equation and is also increased on the right side of its T account.
False
The payment of a liability is recorded by a debit to the liability account and a credit to the owner's capital account.
False
The top of the T account is used for account titles. Credits are entered on the left side of the T; debits, on the right.
False
A business groups its accounts in a ledger.
True
A business transaction can affect two accounts on the same side of the accounting equation and still leave the equation in balance.
True
Debit and credit rules for accounts on one side of the accounting equation are mirror images of those on the other side.
True
Every transaction affects two or more accounts and is recorded by equal amounts of debits or credits.
True
The difference between the debit and credit amounts is an account is the account balance.
True
Received a $65 check from Hector Ramirez, CPA, for office supplies purchased earlier.
a.) cash in bank b.) accounts receivable
Melanie Nelson deposited $15,000 in cash from personal funds into the business checking account.
a.) cash in bank g.) Mel Nelson, Capital
Melanie Nelson invested an additional $3,000 cash in the business.
a.) cash in bank g.) Mel Nelson, Capital
The _______ is an "official" list of all the accounts used by a business to record its transactions.
a.) chart of accounts
A decrease in the owner's capital account is recorded as a ___________.
a.) debit
A decrease to Accounts Payable is a ______________.
a.) debit
An increase to Office Furniture is a _______________.
a.) debit
The normal balance for Accounts Receivable is a __________.
a.) debit
The normal balance for asset accounts is a ______________.
a.) debit
Sold $65 in office supplies to Hector Ramirez, CPA, on account.
b.) accounts receivable c.) office supplies
A decrease in an asset account is recorded as a _____________.
b.) credit
An amount entered on the right side of an account is a(n) ________.
b.) credit
An increase in a liability account is recorded as a _____________.
b.) credit
An increase to Gilberto Ferreira, Capital is a ______________.
b.) credit
The normal balance for Accounts Payable is a ____________.
b.) credit
The normal balance for the owner's capital account is a ___________.
b.) credit
The amount entered on the left side of an account is the _______.
c.) debit
Issued a check for $682 to buy supplies for the office.
c.) office supplies a.) cash in bank
________ requires a debit and a credit for each transaction.
d.) double-entry accounting
Melanie Nelson issued a check for $1,750 to buy store equipment.
d.) store equipment a.) cash in bank
Melanie Nelson bought a computer for the business on credit from Modern Equipment Inc. for $1,599.
e.) office equipment f.) accounts payable
Issued a check for $800 to Modern Equipment Inc. as half payment for the computer.
f.) accounts payable a.) cash in bank
An account's _________ is always on the increase side of an account.
f.) normal balance
A(n) _____ is a tool used to analyze a business transaction's effect on an account.
g.) T account
