Question 1

Which of the following describes the classification and normal balance of the Retained Earnings account?

Accepted Answer

A) Asset, debit 
B) Stockholders' equity, credit 
C) Revenues, credit 
D) Expense, debit 
A) Asset, debit 
B) Stockholders' equity, credit 
C) Revenues, credit 
D) Expense, debit B

Question 2

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

Accepted Answer

A) True 
 B)False  True

Question 3

Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner?

Accepted Answer

A) Dividends Payable and Rent Expense 
B) Utilities Expense and Notes Payable 
C) Prepaid Insurance and Advertising Expense 
D) Service Revenue and Equipment 
A) Dividends Payable and Rent Expense 
B) Utilities Expense and Notes Payable 
C) Prepaid Insurance and Advertising Expense 
D) Service Revenue and Equipment C

Question 4

The purchase of an asset on credit

Accepted Answer

A) increases assets and stockholders' equity. 
B) increases assets and liabilities. 
C) decreases assets and increases liabilities. 
D) leaves total assets unchanged. 
A) increases assets and stockholders' equity. 
B) increases assets and liabilities. 
C) decreases assets and increases liabilities. 
D) leaves total assets unchanged.

Question 5

Which of the following accounts probably would be listed after the others in a chart of accounts?

Accepted Answer

A) Accumulated Depreciation-Buildings 
B) Insurance Expense 
C) Dividends 
D) Notes Payable 
A) Accumulated Depreciation-Buildings 
B) Insurance Expense 
C) Dividends 
D) Notes Payable

Question 6

The Dividends account

Accepted Answer

A) appears on the income statement along with the expenses of the business. 
B) must show transactions every accounting period. 
C) is increased with debits and decreased with credits. 
D) is not a proper subdivision of stockholders' equity. 
A) appears on the income statement along with the expenses of the business. 
B) must show transactions every accounting period. 
C) is increased with debits and decreased with credits. 
D) is not a proper subdivision of stockholders' equity.

Question 7

Which of the following statements is true regarding the recording process?

Accepted Answer

A) Because IFRS (International Financial Reporting Standards) rely more on fair value and less on historical cost than U.S.GAAP, the double-entry accounting system is not widely used by companies who use IFRS. 
B) Both IFRS (International Financial Reporting Standards) and U.S.GAAP use the same general rules of debits and credits and the steps in the recording process. 
C) A trial balance using IFRS (International Financial Reporting Standards) is organized by first showing the accounts from the statement of financial position followed by accounts from the income statement; a trial balance using U.S.GAAP is organized using the opposite order. 
D) All of these answer choices are correct. 
A) Because IFRS (International Financial Reporting Standards) rely more on fair value and less on historical cost than U.S.GAAP, the double-entry accounting system is not widely used by companies who use IFRS. 
B) Both IFRS (International Financial Reporting Standards) and U.S.GAAP use the same general rules of debits and credits and the steps in the recording process. 
C) A trial balance using IFRS (International Financial Reporting Standards) is organized by first showing the accounts from the statement of financial position followed by accounts from the income statement; a trial balance using U.S.GAAP is organized using the opposite order. 
D) All of these answer choices are correct.

Question 8

Budke Corporation paid dividends of $5,000. As a result of this event, the

Accepted Answer

A) Dividends account was increased by $5,000. 
B) Dividends account was decreased by $5,000. 
C) Cash account was increased by $5,000. 
D) Cash was increased and the Dividends account was decreased by $5,000. 
A) Dividends account was increased by $5,000. 
B) Dividends account was decreased by $5,000. 
C) Cash account was increased by $5,000. 
D) Cash was increased and the Dividends account was decreased by $5,000.

Question 9

Revenue increases stockholders' equity and should be recorded whenever cash is received from customers.

Accepted Answer

A) True 
 B)False

Question 10

At January 1, 2017, Troyer Industries reported Retained Earnings of $350,000. During 2017, Troyer had a net loss of $75,000 and paid dividends to the stockholders of $50,000. At December 31, 2017, the balance in Retained Earnings is

Accepted Answer

A) $350,000 debit. 
B) $300,000 credit. 
C) $275,000 debit. 
D) $225,000 credit. 
A) $350,000 debit. 
B) $300,000 credit. 
C) $275,000 debit. 
D) $225,000 credit.

Question 11

Which pair of the listed accounts follows the rules of debits and credits in relation to increases and decreases in the opposite manner?

Accepted Answer

A) Salaries and Wages Expense and Notes Payable 
B) Common Stock and Unearned Rent Revenue 
C) Prepaid Rent and Advertising Expense 
D) Service Revenue and Notes Payable 
A) Salaries and Wages Expense and Notes Payable 
B) Common Stock and Unearned Rent Revenue 
C) Prepaid Rent and Advertising Expense 
D) Service Revenue and Notes Payable

Question 12

The classification and normal balance of the Dividends account is

Accepted Answer

A) revenue with a credit balance. 
B) an expense with a debit balance. 
C) a liability with a credit balance. 
D) stockholders' equity with a debit balance. 
A) revenue with a credit balance. 
B) an expense with a debit balance. 
C) a liability with a credit balance. 
D) stockholders' equity with a debit balance.

Question 13

Why are expenses increased with a debit?

Accepted Answer

A) They are always paid by cash, which is credited.Thus expenses are debited. 
B) They decrease stockholders' equity thus they are increased with a debit. 
C) They have the same rules of debits and credits as the retained earnings account. 
D) None of the statements are correct. 
A) They are always paid by cash, which is credited.Thus expenses are debited. 
B) They decrease stockholders' equity thus they are increased with a debit. 
C) They have the same rules of debits and credits as the retained earnings account. 
D) None of the statements are correct.

Question 14

Which accounts normally have debit balances?

Accepted Answer

A) Assets, expenses, and revenues 
B) Assets, expense, and retained earnings 
C) Assets, liabilities, and dividends 
D) Assets, expenses, and dividends 
A) Assets, expenses, and revenues 
B) Assets, expense, and retained earnings 
C) Assets, liabilities, and dividends 
D) Assets, expenses, and dividends

Question 15

Economic events that require recording in the financial statements are called accounting transactions.

Accepted Answer

A) True 
 B)False

Question 16

Which accounts normally have credit balances?

Accepted Answer

A) Revenues, liabilities, and dividends 
B) Revenues, liabilities, and assets 
C) Revenues, liabilities, and retained earnings 
D) Revenues, liabilities, and expenses 
A) Revenues, liabilities, and dividends 
B) Revenues, liabilities, and assets 
C) Revenues, liabilities, and retained earnings 
D) Revenues, liabilities, and expenses

Question 17

At September 1, 2017, Baxter Inc. reported Retained Earnings of $423,000. During the month, Baxter generated revenues of $60,000, incurred expenses of $36,000, purchased equipment for $15,000 and paid dividends of $6,000. What is the balance in Retained Earnings at September 30, 2017?

Accepted Answer

A) $423,000 debit 
B) $24,000 credit 
C) $426,000 credit 
D) $441,000 credit 
A) $423,000 debit 
B) $24,000 credit 
C) $426,000 credit 
D) $441,000 credit

Question 18

The journal is a chronological record of all transactions.

Accepted Answer

A) True 
 B)False

Question 19

Collection of a $600 Accounts Receivable

Accepted Answer

A) increases an asset $600; decreases an asset $600. 
B) increases an asset $600; decreases a liability $600. 
C) decreases a liability $600; increases stockholders' equity $600. 
D) decreases an asset $600; decreases a liability $600. 
A) increases an asset $600; decreases an asset $600. 
B) increases an asset $600; decreases a liability $600. 
C) decreases a liability $600; increases stockholders' equity $600. 
D) decreases an asset $600; decreases a liability $600.

Question 20

Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?

Accepted Answer

A) Prepaid Insurance and Dividends 
B) Dividends and Interest Revenue 
C) Interest Payable and Common Stock 
D) Advertising Expense and Land 
A) Prepaid Insurance and Dividends 
B) Dividends and Interest Revenue 
C) Interest Payable and Common Stock 
D) Advertising Expense and Land

Exam 3: The Accounting Information System

Which of the following describes the classification and normal balance of the Retained Earnings account?

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

Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner?

The purchase of an asset on credit

Which of the following accounts probably would be listed after the others in a chart of accounts?

The Dividends account

Which of the following statements is true regarding the recording process?

Budke Corporation paid dividends of $5,000. As a result of this event, the

Revenue increases stockholders' equity and should be recorded whenever cash is received from customers.

At January 1, 2017, Troyer Industries reported Retained Earnings of $350,000. During 2017, Troyer had a net loss of $75,000 and paid dividends to the stockholders of $50,000. At December 31, 2017, the balance in Retained Earnings is

Which pair of the listed accounts follows the rules of debits and credits in relation to increases and decreases in the opposite manner?

The classification and normal balance of the Dividends account is

Why are expenses increased with a debit?

Which accounts normally have debit balances?

Economic events that require recording in the financial statements are called accounting transactions.

Which accounts normally have credit balances?

At September 1, 2017, Baxter Inc. reported Retained Earnings of $423,000. During the month, Baxter generated revenues of $60,000, incurred expenses of $36,000, purchased equipment for $15,000 and paid dividends of $6,000. What is the balance in Retained Earnings at September 30, 2017?

The journal is a chronological record of all transactions.

Collection of a $600 Accounts Receivable

Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?

Introduction to Financial Statements

A Further Look at Financial Statements

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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