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
