question

In Accounting the terms debit and credit mean left and right respectively

answer

T

question

The double-entry system is a logical method for recording transactions and results in equal debits and credits for each transaction.

answer

T

question

Revenue accounts normally have debit balances

answer

F. The normal balance of a revenue account is a credit

question

The normal balance of an expense is a credit

answer

F. The normal balance of an expense account is a debit.

question

The expanded basic equation is: Assets = Liabilities + Owners's Capital + Owner's Drawing+ Revenues - Expenses

answer

F. The expanded basic equation is: Assets = Liabilities + Owners's Capital - Owner's Drawing+ Revenues - Expenses

question

The journal discloses in one place the complete effect of a transaction.

answer

T

question

The journal provides a chronological record of transactions

answer

T

question

Separate journal entries are made for each transaction

answer

T

question

The general journal is the most basic form of journal.

answer

T

question

A ledger is merely a bookkeeping device and therefore do not provide much useful data for management.

answer

F. The ledger is the entire group of accounts maintained by a company. It keeps in one place all the information about changes in account balances. The trial balance is a list of their balances at a given time.

question

A ledger is a list of accounts and their balances at a given time.

answer

F. The ledger gives management useful information about account balances; e.g. Accounts Receivable can be inspected to ascertain the amounts due from customers.

question

The standard form of ledger account has three money columns for debit, credit and balance

answer

T

question

Posting is the procedure of entering transactions data in the general journal.

answer

F. Posting is the procedure of transferring journal entries to the ledger accounts. Journalizing is the procedure of entering transaction data in a journal.

question

The chart of accounts is a listing of the accounts and the account numbers which identify their location in the ledger.

answer

T

question

The purpose of transaction analysis is to first identify the type of account involved and then identify whether a debit or a credit to the account is required.

answer

T

question

A trial balance lists the accounts and their location in the ledger.

answer

F. The trial balance is a list of accounts and their balances at a given time. The chart fo accounts is a listing of accounts and their location in the ledger.

question

The primary purpose of a trial balance is to prove the mathematical equality of the debits and credits after posting.

answer

T

question

A trial balance is usually prepared daily.

answer

F. A trial balance can be prepared at any point in time. but is customarily prepared at the end of an accounting period.

question

A trial balance does not prove that all transactions have been recorded or that the ledger is correct.

answer

T

question

The trial balance will not balance when incorrect account titiles are used in journalizing or posting.

answer

F. One of the limitations of the trial balance is that it will still balance when incorrect account titles are used in journalizing or posting.

question

An account is an individual accounting record of increases and decreases in specific:

answer

assets, liabilities, and owner's equity items

question

Credits:

answer

decrease assets and increase liabilities

question

An account which is increased by a credit is:

answer

a liability account

question

Which of the following rules is incorrect? a. Credits decrease the drawing account. b. Debits increase the capital account. c. Credits increase revenue accounts. d. Debits decrease liability accounts.

answer

b. Debits increase the capital account.

question

An account which is increaed by a debit is a : a. liability account. b. drawing account c. capital account. d. revenue account.

answer

b. drawing account

question

An account which is increased by a credit is a(n): a. drawing account b. revenue account c. expense account d. asset account

answer

b. revenue account

question

Which of the following is the correct sequence of steps in the recording process? a. Posting journalizing, analyzing b. Journalizing, analyzing, posting c. Analyzing, posting, journalizing d. Analyzing, journalizing, posting

answer

d. Analyzing, journalizin, posting

question

The column in the general journal which is not used during journalizing is the :

answer

reference column The data column , the account title column, and the debit amount column are all used during the journalizing procedure. The reference column is used later when the journal entries are posted to the ledger.

question

Which of the following is a false statement? a. The account Revenue from fees is increased with a credit. b. A compound entry is when two or more accounts are required in one journal entry. c. Owner's drawing is increased by a debit entry. d. All transactions are initially recorded in a journal.

answer

b. A compound entry is when three or more accounts are required in one journal entry. a,c and d are all true statements.

question

Which of the following is not considered a significant contribution of hte journal to the recording process? a. The journal provides a chronological record fo all transactions. b. The journal provides a means of accumulating in one place all the information about changes in accounts balances. c. The journal discloses in one place the complete effect of a transaction. d. The journal helps prevent or locate errors since theh debit and credit amounts for each entry can be readily compared.

answer

b. The journal provides a means of accumulating in one place all the information about changes in accounts balances. The ledger -not the journal providesa means...

question

McClory Co. purchases equipment for 900 and supplies for 300 from Rudnicky Co. for 1,200 cash. The entry for this transaction will include:

answer

debit to Equipment 900 and a debit to Supplies for 300 for McClory.

question

Laventhol Co. sells 300 of equipment to Reiner Co. on credit. Reiner will enter the transaction in the journal :

answer

credit to Accounts Payable and a debit to Equipment.

question

Szyknowny Co. buys a machine from Scott Co. paying half in cash and putting the balance on account. The journal entry for this transaction by Szyknowny will include a :

answer

credit to Accounts Payable and a credit to cash.

question

Hrubec Co. pays 900 cash for a one-year insurance policy on July 1, 2011. The policy will expire on June 30, 2012. The entry for July 1, 2011 is:

answer

Debit Prepaid Insurance 900; credit Cash 900

question

Kevin Walsh withdraws 300 cash from his business for personal use.

answer

Kevin Walsh, Drawing

question

Vicki Wagner Dance Studio bills a client for dancing lessons earned during the past week. The journal entry will include a credit to :

answer

Dance Fees earned

question

Golden Pork Co. receives 400 from a customer on October 15 in payment of balance due for services billed on October 1. The entry by Golden Pork Co. will include a credit of 400 to:

answer

Accounts Receivable

question

On October 3, Mike Baker, a carpenter, received a cash payment for services previously billed to a client. Mike paid his telephone bill, and he also bought equipment on credit. Tor the three transactions, at least one of the entries will include a: a. credit to Mike Baker, Capital b. credit to Notes Payable c. debit to Accounts Receivable d. credit to Accounts Payable.

answer

d. credit to Accounts Payable.

question

The chart of accounts is a :

answer

listing of the accounts and the account numbers which identify their location in the ledger.

question

A trial balance will not balance if: a. a journal entry is posted twice b. a wrong amount is used in journalizing c. incorrect account titles are used in journalizing d. a journal entry is only partially posted.

answer

d. a journal entry is only partially posted.

question

BOC issues 10,000 shares of $5 par value stock for $15 cash per share.

answer

debit Cash to increase that asset for 150,000, which is 10,000 shares times $15 of cash per share. Credit Common Stock at Par for 50,000. The rest of it goes into Additional Paid in Capital, so we credit Additional Paid in Capital 100,000.

question

BOC acquires a building costing $500,000. It pays $80,000 cash and assumes a long-term mortgage for the balance of the purchase price.

answer

debit Buildings to increase the asset by 500,000. credit Cash to reduce that asset by 80,000. credit Notes Payable to increase that liability by 420,000.

question

BOC obtains a three-year fire insurance policy and pays the $3,000 premium in advance.

answer

debit Prepaid Insurance to increase this asset by 3,000. credit Cash for 3,000.

question

BOC acquires on account office supplies costing $20,000 and merchandise inventory costing $35,000.

answer

Debit Office Supplies to increase that asset by 20,000. Debit Inventory to increase that asset by 35,000. Credit Accounts Payable for 55,000

question

BOC pays $22,000 to the suppliers

answer

debit Accounts Payable to reduce the liability 22,000 credit Cash to reduce the asset 22,000.

question

BOC exchanges a building valued on the books at $200,000 for a piece of undeveloped land.

answer

debit Land to increase that asset. We're giving up a building. So we're going to credit Building to reduce that asset.

question

BOC retires $1,000,000 of debt by issuing 100,000 shares of $5 par value stock.

answer

debit Notes Payable to reduce the liability for a million. We credit Common Stock at Par, increase that stockholders' equity by 500,000. The rest goes into additional paid in capital, APIC. Credit APIC for the other 500,000.

question

BOC receives an order for $6,000 of merchandise to be shipped next month. The customer pays $600 at the time of placing the order.

answer

debit Cash to increase that asset by 600. credit Advances from Customers to increase the liability for 600.

question

BOC declares and pays $8,000 of cash dividends.

answer

debit Retained Earnings to reduce the stockholders' equity account for 8,000. credit Cash to reduce that asset, $8,000.

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