Accounting Exam 1 final chapter 3
The double-entry system requires that each transaction must be recorded
in at least two different accounts.
Debits
increase assets and decrease liabilities.
A debit to an asset account indicates a(n)
increase in the asset.
The receipt of cash in advance from a customer
increases assets and liabilities.
A revenue generally
increases assets and stockholders' equity.
A revenue account
is increased by credits.
A revenue account
is increased with a credit.
The Dividends account
is increased with debits and decreased with credits.
The right side of an account
is the credit side.
The name given to entering transaction data in the journal is
journalizing.
Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner?
Prepaid Insurance and Advertising Expense
Which of the following accounts has a normal debit balance?
Prepaid Rent
Which of the following is not part of the recording process?
Preparing a trial balance
Which of the following accounts has a normal credit balance?
Rent Revenue
Which of the following accounts is increased with a credit?
Sales Revenue
Which of the following describes the classification and normal balance of the Retained Earnings account?
Stockholders' equity, credit
The basic format of a journal would not include a(n)
T-account.
Which of the following is not true of the terms debit and credit?
They can be interpreted to mean increase and decrease.
Which one of the following is not a part of an account?
Trial balance
A journal provides
a chronological record of transactions.
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.
After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to
ledger accounts.
After transaction information has been recorded in the journal, it is transferred to the
ledger.
Which accounts normally have credit balances?
Revenues, liabilities, and retained earnings
A debit is not the normal balance for which account listed below?
Service Revenue
A journal is not useful for
preparing financial statements.
In the first month of operations, the total of the debit entries to the Cash account amounted to $1,400 and the total of the credit entries to the Cash account amounted to $800. The Cash account has a
$600 debit balance. X Solution: $1,400 dr. - $800 cr. = $600 dr.
An accountant has debited an asset account for $800 and credited a liability account for $700. Which of the following would be an incorrect way to complete the recording of the transaction?
Debit a stockholders' equity account for $100.
Which of the following accounts is increased with a debit?
Dividends
A credit is not the normal balance for which account listed below?
Dividends account
Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?
Dividends and Interest Revenue
In recording an accounting transaction in a double-entry system
the amount of the debits must equal the amount of the credits.
In its simplest form, an account consists of all of the following except
explanation column.
Which statement about an account is true?
An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items.
Which one of the following represents the expanded basic accounting equation?
Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues
Which accounts normally have debit balances?
Assets, expenses, and dividends
An accountant has debited an asset account for $900 and credited a liability account for $600. What can be done to complete the recording of the transaction?
Credit a different asset account for $300.
An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction?
Credit a different asset account for $500.
Which of the following describes the classification and normal balance of the Unearned Rent Revenue account?
Liability, credit
Evidence that would not help with determining the effects of a transaction on the accounts would be a(n)
advertising brochure.
An account is a part of the financial information system and is described by each one of the following except
an account is a source document.
The usual sequence of steps in the recording process is to
analyze each transaction, enter the transaction in the journal, and transfer the information to the ledger accounts.
The first step in the recording process is to
analyze the transaction in terms of its effect on the accounts.
The usual sequence of steps in the transaction recording process is
analyze, journalize, post to the ledger.
If a company issues common stock for $40,000 and uses $30,000 of the cash to purchase a truck,
assets will be increased by $40,000.
If a company buys a $700 machine on credit, this transaction will affect the
balance sheet only.
Transactions in a journal are initially recorded in
chronological order.
An account will have a credit balance if the
credits exceed the debits.
The basic form of a journal entry has the
debit account entered first at the extreme left margin.
Assets normally show
debit balances.
A company that receives money in advance of performing a service
debits cash and credits unearned service revenue.
A paid dividend
decreases assets and stockholders' equity.
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 accounting transactions, evidence that a transaction has taken place is obtained from
source documents.
The classification and normal balance of the Dividends account is
stockholders' equity with a debit balance.
The left side of an account is
the debit side.
A complete journal entry does not show
the new balance in the accounts affected by the transaction.
