Chapter 3: Analyzing Business Transactions Using T Accounts

When the trial balance totals are not equal, the error may have been caused by recording a debit as a credit if the difference is divisible by

2

If the trial balance totals are not equal, the error may have been caused by a transposition if the difference is divisible by

9

If assets are numbered from 100-199, which of the following accounts would not be given a number in the 100 series?

Accounts Payable

Accounts Payable

Amounts a business must pay in the future.

accounts receivable

Claims for future collection from customers

The company owner took 5,000 cash for personal use.

Credit Cash, and debit Drawing

Prepaid expense

Expense items acquired, recorded, and paid for in advance of their use.

True or false: when analyzing a transaction using a T account, increases for all accounts are shown on the left-hand column

False

Which of the following groups contain only accounts that normally have credit balances?

Fees Income and Luke Warm, Capital

Identify which terms appear on the title of an income statement:

For the Year Ended 2014, Company Name, Income Statement

Which of the following accounts is not a permanent account

Salaries Expense

Identify which of the following correctly describes a T-Account

accountants use T accounts to analyze transactions, consists of a vertical line and a horizontal line that resembles the letter T, the name of the account is written on the horizontal (top) line, increases shown on left or right hand depending on type of account analyzed

Best Consulting Co. issued a check for $1,000 to an office supply vendor in partial payment of an open account balance. This transaction would be recorded with a debit entry to the _____ account

accounts payable

steps to analyze the effect of a business transaction

analyze the financial event, apply the left-right rules for each account affected, make the entry in T-account formI

Accounts that decrease on the right-hand side of the T accounts

assets: cash, equipment, supplies, accounts receivable, expenses: expense and owner's drawing

Accounts that are increased on the left-hand side of the T accounts

assets: cash, equipment, supplies, accounts receivable, expenses: expense and owner's drawing, prepaid rent

The owner's capital account appears on which two financial statements?

balance sheet, statement of owner's equity

A list of the accounts used by a business to record its financial transactions is called the

chart of accounts

A company collected $200 cash from customers for services provided. This transaction would _____ the fees earned account, and ____ the cash account

credit, debit

An entry on the left-hand side of a T account is called a

debit

A company issued a check for $500 to an office supply vendor in partial payment of an open account balance. This transaction would be recorded with a:

debit to accounts payable, credit to cash

A special type of owner's equity account set up to record the owner's withdrawal of cash from the business is called the ____ account

drawing

Steps to prepare a trial balance

enter the trial balance heading, enter the account names in the order they appear on the financial statements, enter the ending balances of each account in the appropriate debit or credit column, total the debit column; total the credit column, compare the total debits with total credits

Turner Company purchased equipment for 2,500 in cash. This transaction would increase the ___ account

equipment

Which of the following types of accounts normally have debit balances

expenses and assets

The trial balance includes all of the following except:

income or loss for the period

Net income appears on which two financial statements

income statement, statement of owner's equity

The normal balance of an account is the

increase side of the account

Accounts that are increased on the right-hand side of the T account

liabilities: accounts payable, owner's equity: capital, Balance: revenue, fees income

Accounts that decrease on the left-hand side of the T accounts

liabilities: accounts payable, owner's equity: capital, Balance: revenue, fees income

Identify which statements are correct:

liability accounts show the debts of the business, assets accounts show the property a business owns

Identify the correct statementss

owner's equity decrease on the left (debit) side, liabilities increase on the right (credit) side, assets increase on the left (debit) side

Identify the correct statement bout the accounting equation

owner's equity increases on the right (credit) side

An account that is kept open from one accounting period to the next, such as cash, is called a ____ account

permanent or real

Which of the following increase owner's equity?

revenue

owner's equity

show the owner's financial interest in the business

asset

show the property that a business owns

liability

shows the debts of the business

An error in which the decimal point is misplaced, for example, when 317 is written as 3.17-is an example of a:

slide

The net income or net loss from the income statement is transferred to the

statement of owner's equity

A company purchased office supplies for $500 in cash. This transaction would debit the _____ account, and credit the _____ account

supplies, cash

The account used to record increases in owner's equity from the sale of goods or services is

the revenue account

An error in which the digits of a number are switched- for example, 571 is recorded as 517 is an example of a:

transposition

A statement to test the accuracy of total debits and credits after transactions have been record is called the

trial balance

Permanent accounts, such as accounts receivable are kept open from one accounting period to the next

true