Accounting Study

Account balances increase on the normal balance side of an account. a. True b. False

a True

The side of the account that is increased is called the a. debit. b. credit. c. normal balance. d. average balance.

c Normal Balance

The account used to summarize the owner's equity in a business is called: a. capital. b. a record. c. a transaction. d. an account balance.

a

A list of account titles and numbers showing the location of each account in a ledger is known as a(n) a. chart of accounts. b. account summary. c. T account form. d. balance-ruled account form.

a Chart of accounts

A business paid cash for insurance. How is this transaction recorded? a. credit cash, debit insurance b. debit cash, credit insurance c. credit accounts payable, debit insurance d. debit accounts payable, credit insurance

a Credit cash, Debit insurance

A business received cash on account. How is this transaction recorded? a. debit cash, credit accounts receivable b. debit cash, credit accounts payable c. credit cash, debit accounts receivable d. credit cash, debit accounts payable

a Debit cash, Credit accounts receivable

When a company receives cash from a customer for a prior sale, the transaction a. increases cash, decreases accounts receivable. b. increases accounts receivable, decreases cash. c. increases both cash and accounts receivable. d. decreases both cash and accounts receivable.

a Increases cash, decreases accounts receivable

A group of accounts is called a(n) a. ledger. b. group. c. account summary. d. chart of accounts.

a Ledger

Which of the following is not a transaction that will affect owner's equity? a. paid cash for supplies b. received cash from sales c. sold services on account d. received cash from owner as an investment

a Paid cash for supplies

Transferring information from a journal entry to a ledger account is called a. posting. b. transferring. c. copying. d. summarizing.

a Posting

A business owned by one person is called a: a. proprietorship. b. corporation. c. partnership. d. common-law business.

a Proprietorship

Which of the following is not part of an entry? a. signature b. source document c. date d. debit

a Signature

A business paper from which information is obtained for a journal entry is called a(n) a. source document. b. receipt. c. invoice. d. check.

a Source Document

An accounting device used to analyze transactions is called a(n) a. T account. b. calculator. c. record. d. ledger.

a T account

A business received cash from owner as an investment. This transaction is recorded by debiting cash and crediting Capital. a. True b. False

a True

A decrease in owner's equity resulting from the operation of a business is called an expense. a. True b. False

a True

A general ledger contains all accounts needed to prepare financial statements. a. True b. False

a True

A separate form for each account is used to summarize all the changes to a single account. a. True b. False

a True

Accounts in a general ledger are arranged in the same order as they appear on financial statements. a. True b. False

a True

All journal entry amounts are posted to the general ledger from the general journal. a. True b. False

a True

Before a transaction is recorded in a journal, the transaction is analyzed into its debit and credit parts. a. True b. False

a True

Each business has a unique chart of accounts. a. True b. False

a True

Each part of the accounting equation consists of one or more accounts: a. True b. False

a True

Posting sorts journal entries so that all debits and credits affecting each account are brought together in one place. a. True b. False

a True

The account used to summarize the owner's equity in a business is called capital. a. True b. False

a True

The owner's capital account is on the right side of the accounting equation and has a normal credit balance. a. True b. False

a True

The total of amounts on the left side of the accounting equation must always equal the total of amounts on the right side. a. True b. False

a True

To prove a journal page, you must verify that the total debits on the page equal the total credits. a. True b. False

a True

Understanding accounting helps managers and owners make better business decisions. a. True b. False

a True

Anything of value that is owned is called a(n): a. expense. b. asset. c. liability. d. possession.

b Asset

A list of accounts used by a business is called a(n) a. list. b. chart of accounts. c. accounting record. d. database.

b Chart of accounts

Transactions are recorded in a journal in a. alphabetical order. b. chronological order. c. order of importance. d. amounts least to greatest.

b Chronological Order

A business bought supplies on account. How is this transaction recorded? a. debit supplies, credit cash b. debit supplies, credit accounts payable c. credit supplies, debit cash d. credit supplies, debit accounts payable

b Debit supplies, Credit accounts payable

A business form giving written acknowledgement for cash received is called a sales invoice. a. True b. False

b False

A business paid cash on account. This transaction is recorded by debiting cash and crediting accounts payable. a. True b. False

b False

A correcting entry is an additional journal entry to add on to a previous transaction. a. True b. False

b False

A revenue account has a normal debit balance. a. True b. False

b False

A sale for which cash will be received at a later date is called accounts payable. a. True b. False

b False

A withdrawal account has a normal credit balance. a. True b. False

b False

All accounting transactions are recorded in the accounting equation. a. True b. False

b False

An account balance is a term applied when both sides of the accounting equation are equal, or, in balance: a. True b. False

b False

Because expenses decrease owner's equity, increases in expenses are recorded as credits. a. True b. False

b False

Dollars and cents signs and decimals points are always used when writing amounts on ruled accounting paper so as not to be confusing. a. True b. False

b False

Every transaction must affect accounts on both sides of the accounting equation. a. True b. False

b False

Financial rights to the assets of a business are called liens. a. True b. False

b False

In a T account, amounts recorded on the left side are called credits. a. True b. False

b False

Inaccurate accounting records is used to make the business appear to be more successful than it really is, and thereby can help the business really succeed. a. True b. False

b False

Revenue increases owner's equity and decreases cash. a. True b. False

b False

Splitting up a journal entry to fill up a general journal page is sometimes necessary so there are no blank lines for anyone to think the page is incomplete. a. True b. False

b False

Suppliers that extend credit to a business and institution have no stake in that organization's success or failure. a. True b. False

b False

The four steps in making a journal entry are reversed when making a correcting entry. a. True b. False

b False

The posting reference is the first step recorded in the posting procedure. a. True b. False

b False

To keep from getting overloaded, businesses usually record transactions as soon as they occur. a. True b. False

b False

When an account is no longer needed, it is removed from the general ledger and the chart of accounts; but the now unused number cannot be reassigned. a. True b. False

b False

When you prove Cash at the end of each month, the difference between the totals of the debits and credits is the amount of profit earned during the month. a. True b. False

b False

A journal with two amount columns in which all kinds of entries can be recorded is called a(n) a. special journal. b. general journal. c. bi-column journal. d. multi-purpose journal.

b General Journal

Which of the following is not part of file maintenance? a. arranging accounts in a general ledger b. proving a five-column journal c. assigning account numbers d. keeping records current

b Proving a five-column journal

Planning, recording, analyzing, and interpreting financial information is called: a. organizing. b. accounting. c. profiting. d. formatting.

b. accounting

When services are sold on account, a. Accounts Payable is debited and Sales is credited. b. Sales is debited and Accounts Payable is credited. c. Accounts Receivable is debited and Sales is credited. d. Sales is debited and Accounts Receivable is credited.

c Accounts Receivable is debited and Sales is credited

A business sold services on account. How is this transaction recorded? a. debit accounts receivable, debit sales b. credit accounts receivable, credit sales c. debit accounts receivable, credit sales d. credit accounts receivable, debit sales

c Debit accounts receivable, Credit sales

A form describing the goods or services sold, the quantity, and the price is called a(n) a. memorandum. b. proof of purchase. c. invoice. d. receipt.

c Invoice

If one account is increased, another account on the same side of the equation a. must also increase. b. must stay the same. c. must be decreased. d. is moved to the other side of the equation.

c Must be decreased

The amount remaining after the value of all liabilities is subtracted from the value of all assets is called: a. profit. b. loss. c. owner's equity. d. account balance.

c Owner's equity

Determining that the amount of cash agrees with the accounting records is called a. balancing the account. b. verifying records. c. proving cash. d. ruling.

c Proving Cash

A business that performs an activity for a fee is called a: a. proprietorship: b. corporation. c. service business. d. online business.

c Service Business

A journal page is complete a. at the end of the day. b. when all the lines are filled. c. when there is insufficient space to record any more entries. d. all of the answers are correct.

c When there is insufficient space to record any more entries

Financial reports that summarize the financial condition and operations of a business are called financial: a. summaries. b. records. c. statements. d. outputs.

c. Statements

A record summarizing all the information pertaining to a single item in the accounting equation is known as a(n) a. transaction. b. balance. c. record. d. account.

d Account

The numbers in the Post. Ref. columns of the general ledger account and the journal serve which purpose? a. An entry in an account can be traced to its source in a journal. b. An entry in a journal can be traced to where it was posted in an account. c. If posting is interrupted, the accounting personnel can easily see which entries in the journal still need to be posted. d. All of the answers are correct.

d All the answers are correct

The source document for cash payments is a(n) a. invoice. b. receipt. c. calculator tape. d. check.

d Check

A journal entry made to correct an error in the ledger is called a(n) a. adjusting entry. b. reversing entry. c. error reversal. d. correcting entry.

d Correcting Entry

A business paid cash for supplies. How is this transaction recorded? a. debit cash, debit supplies b. credit cash, credit supplies c. debit cash, credit supplies d. credit cash, debit supplies

d Credit cash, Debit supplies

If you pay $300.00 cash on account to Supply Depot you would a. debit Cash for $300.00 and credit Accounts Payable--Supply Depot for $300.00. b. debit Supplies for $300.00 and credit Cash for $300.00. c. debit Cash for $300.00 and credit Supplies for $300.00. d. debit Accounts Payable--Supply Depot for $300.00 and credit for Cash $300.00.

d Debit Accounts Payable--Supply Depot for $300.00 and credit for Cash $300.00.

Errors are corrected: a. so that no one can tell that an error was made in the first place. b. at the end of the month. c. by someone other than the person who made the error in the first place. d. in a way that does not cause doubts about what the correct information is.

d In a way that does not cause doubts about what the correct information is

A chart of accounts is a a. line graph showing increases and decreases of account balances in the past year. b. list of all the accounts on the balance sheet. c. list of all the accounts on the income statement. d. None of the answers are correct.

d None of the answers are correct

When a business pays cash for supplies: a. accounts payable increases. b. cash increases. c. owner's equity increases. d. supplies increases.

d Supplies increases

A business activity that changes assets, liabilities, or owner's equity is called a: a. deposit. b. withdrawal. c. deal. d. transaction.

d Transaction

Which one of the following questions is not asked every time a transaction is analyzed into its debit and credit parts? a. Which accounts are affected? b. How is each account classified? c. How is each account changed? d. What is the new balance of each account?

d What is the new balance of each account?