Chapter 2

The trial balance of Clooney Corporation had accounts with the following normal balances: Cash $5,000, Service Revenue $85,000, Salaries and Wages Payable $4,000, Salaries and Wages Expense $40,000, Rent Expense $10,000, Common Stock $42,000, Dividends $15,000, and Equipment $61,000. In preparing a trial balance, the total in the debit column is: (a) $131,000. (b) $216,000. (c) $91,000. (d) $116,000.

(a) $131,000.

Which of the following statements about a journal is false? (a) It is not a book of original entry. (b) It provides a chronological record of transactions. (c) It helps to locate errors because the debit and credit amounts for each entry can be readily compared. (d) It discloses in one place the complete effect of a transaction.

(a) It is not a book of original entry.

A trial balance: (a) is a list of accounts with their balances at a given time. (b) proves the mathematical accuracy of journalized transactions. (c) will not balance if a correct journal entry is posted twice. (d) proves that all transactions have been recorded.

(a) is a list of accounts with their balances at a given time.

Which of the following statements about an account is true? (a) In its simplest form, an account consists of two parts. (b) An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items. (c) There are separate accounts for specific assets and liabilities but only one account for stockholders' equity items. (d) The left side of an account is the credit or decrease side.

(b) An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items.

Which of the following is not part of the recording process? (a) Analyzing transactions. (b) Preparing a trial balance. (c) Entering transactions in a journal. (d) Posting transactions.

(b) Preparing a trial balance.

The order of the accounts in the ledger is: (a) assets, revenues, expenses, liabilities, common stock, dividends. (b) assets, liabilities, common stock, dividends, revenues, expenses. (c) common stock, assets, revenues, expenses, liabilities, dividends. (d) revenues, assets, expenses, liabilities, common stock, dividends.

(b) assets, liabilities, common stock, dividends, revenues, expenses.

Before posting a payment of $5,000, the Accounts Payable of Senator Corporation had a normal balance of $16,000. The balance after posting this transaction was: (a) $21,000. (b) $5,000. (c) $11,000. (d) Cannot be determined.

(c) $11,000.

A trial balance will not balance if: (a) a correct journal entry is posted twice. (b) the purchase of supplies on account is debited to Supplies and credited to Cash. (c) a $100 cash dividend is debited to Dividends for $1,000 and credited to Cash for $100. (d) a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

(c) a $100 cash dividend is debited to Dividends for $1,000 and credited to Cash for $100.

The purchase of supplies on account should result in: (a) a debit to Supplies Expense and a credit to Cash. (b) a debit to Supplies Expense and a credit to Supplies. (c) a debit to Supplies and a credit to Accounts Payable. (d) a debit to Supplies and a credit to Accounts Receivable.

(c) a debit to Supplies and a credit to Accounts Payable.

Debits: (a) increase both assets and liabilities. (b) decrease both assets and liabilities. (c) increase assets and decrease liabilities. (d) decrease assets and increase liabilities.

(c) increase assets and decrease liabilities.

A ledger: (a) contains only asset and liability accounts. (b) should show accounts in alphabetical order. (c) is a collection of the entire group of accounts maintained by a company. (d) is a book of original entry.

(c) is a collection of the entire group of accounts maintained by a company.

Accounts that normally have debit balances are: (a) assets, expenses, and revenues. (b) assets, expenses, and common stock. (c) assets, liabilities, and dividends. (d) assets, dividends, and expenses.

(d) assets, dividends, and expenses.

A revenue account: (a) is increased by debits. (b) is decreased by credits. (c) has a normal balance of a debit. (d) is increased by credits.

(d) is increased by credits.

Posting: (a) normally occurs before journalizing. (b) transfers ledger transaction data to the journal. (c) is an optional step in the recording process. (d) transfers journal entries to ledger accounts.

(d) transfers journal entries to ledger accounts.