Question 1

A credit to a liability account

Accepted Answer

A) indicates an increase in the amount owed to creditors. 
B) indicates a decrease in the amount owed to creditors. 
C) is an error. 
D) must be accompanied by a debit to an asset account. 
A) indicates an increase in the amount owed to creditors. 
B) indicates a decrease in the amount owed to creditors. 
C) is an error. 
D) must be accompanied by a debit to an asset account.

Question 2

The purchase of an asset for cash

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 3

All of the following are significant contributions that the journal makes to the recording process except the journal

Accepted Answer

A) discloses the complete effect of a transaction in one place. 
B) helps prevent or locate errors because debits and credits can be readily compared. 
C) keeps complete information about changes in a specific account balance in one place. 
D) provides a chronological record of transactions. 
A) discloses the complete effect of a transaction in one place. 
B) helps prevent or locate errors because debits and credits can be readily compared. 
C) keeps complete information about changes in a specific account balance in one place. 
D) provides a chronological record of transactions.

Question 4

A debit to an account always indicates an increase in that account.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following errors, each considered individually, would cause the trial balance to be out of balance?

Accepted Answer

A) A payment of $148 to a creditor was posted as a debit to Accounts Payable and a debit of $148 to Cash. 
B) Cash of $530 received from a customer on account was posted as a debit of $350 to Cash and as a credit of $350 to Accounts Payable. 
C) A payment of $59 for supplies was posted as a debit of $95 to Supplies and a credit of $95 to Cash. 
D) A transaction was not posted. 
A) A payment of $148 to a creditor was posted as a debit to Accounts Payable and a debit of $148 to Cash. 
B) Cash of $530 received from a customer on account was posted as a debit of $350 to Cash and as a credit of $350 to Accounts Payable. 
C) A payment of $59 for supplies was posted as a debit of $95 to Supplies and a credit of $95 to Cash. 
D) A transaction was not posted.

Question 6

Posting

Accepted Answer

A) should be performed in account number order. 
B) accumulates the effects of journalized transactions in the individual accounts. 
C) involves transferring all debits and credits on a journal page to the trial balance. 
D) is accomplished by examining ledger accounts and seeing which ones need updating. 
A) should be performed in account number order. 
B) accumulates the effects of journalized transactions in the individual accounts. 
C) involves transferring all debits and credits on a journal page to the trial balance. 
D) is accomplished by examining ledger accounts and seeing which ones need updating.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Question 9

Comstock Company provided consulting services and billed the client $2,500.As a result of this event,

Accepted Answer

A) total assets remained unchanged. 
B) assets increased by $2,500. 
C) equity increased by $2,500 
D) Both assets and equity increased by $2,500. 
A) total assets remained unchanged. 
B) assets increased by $2,500. 
C) equity increased by $2,500 
D) Both assets and equity increased by $2,500.

Question 10

A journal provides

Accepted Answer

A) the balances for each account. 
B) information about a transaction in several different places. 
C) a list of all accounts used in the business. 
D) a chronological record of transactions. 
A) the balances for each account. 
B) information about a transaction in several different places. 
C) a list of all accounts used in the business. 
D) a chronological record of transactions.

Question 11

Which of the following accounts would likely be listed before 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 12

An account is often referred to as a T-account because of the way it is constructed.

Accepted Answer

A) True 
 B)False

Question 13

Howard Company had a transaction that caused a $5,000 increase in both assets and liabilities.This transaction could have been a(n)

Accepted Answer

A) purchase of office equipment for $12,000, paying $7,000 cash and issuing a note payable for the balance. 
B) investment of $5,000 cash in the business by the stockholders. 
C) purchase of office equipment for $5,000 cash. 
D) repayment of a $5,000 bank loan. 
A) purchase of office equipment for $12,000, paying $7,000 cash and issuing a note payable for the balance. 
B) investment of $5,000 cash in the business by the stockholders. 
C) purchase of office equipment for $5,000 cash. 
D) repayment of a $5,000 bank loan.

Question 14

The basic form of a journal entry has the

Accepted Answer

A) debit account entered first and indented. 
B) credit account entered first and indented. 
C) debit account entered first at the extreme left margin. 
D) credit account entered first at the extreme left margin. 
A) debit account entered first and indented. 
B) credit account entered first and indented. 
C) debit account entered first at the extreme left margin. 
D) credit account entered first at the extreme left margin.

Question 15

The usual sequence of steps in the transaction recording process is

Accepted Answer

A) journalize, analyze, post to the ledger. 
B) analyze, journalize, post to the ledger. 
C) journalize, post to the ledger, analyze. 
D) post to the ledger, journalize, analyze. 
A) journalize, analyze, post to the ledger. 
B) analyze, journalize, post to the ledger. 
C) journalize, post to the ledger, analyze. 
D) post to the ledger, journalize, analyze.

Question 16

An investment by the stockholders in a business increases

Accepted Answer

A) assets and stockholders' equity. 
B) assets and liabilities. 
C) liabilities and stockholders' equity. 
D) assets only. 
A) assets and stockholders' equity. 
B) assets and liabilities. 
C) liabilities and stockholders' equity. 
D) assets only.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The best interpretation of the word "credit" is the

Accepted Answer

A) offset side of an account. 
B) increase side of an account. 
C) right side of an account. 
D) decrease side of an account. 
A) offset side of an account. 
B) increase side of an account. 
C) right side of an account. 
D) decrease side of an account.

Question 19

All business transactions must be entered first in the general ledger.

Accepted Answer

A) True 
 B)False

Question 20

Which statement about an account is true?

Accepted Answer

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 account 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. 
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 account 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.

A credit to a liability account

The purchase of an asset for cash

All of the following are significant contributions that the journal makes to the recording process except the journal

A debit to an account always indicates an increase in that account.

Which of the following errors, each considered individually, would cause the trial balance to be out of balance?

Posting

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?

Comstock Company provided consulting services and billed the client $2,500.As a result of this event,

A journal provides

Which of the following accounts would likely be listed before the others in a chart of accounts?

An account is often referred to as a T-account because of the way it is constructed.

Howard Company had a transaction that caused a $5,000 increase in both assets and liabilities.This transaction could have been a(n)

The basic form of a journal entry has the

The usual sequence of steps in the transaction recording process is

An investment by the stockholders in a business increases

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

The best interpretation of the word "credit" is the

All business transactions must be entered first in the general ledger.

Which statement about an account is true?

Introduction to Financial Statements

A Further Look at Financial Statements

Accrual Accounting Concepts

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

Understanding Investments in Debt and Equity Securities

Filters

Exam 3: The Accounting Information System

A credit to a liability account

The purchase of an asset for cash

All of the following are significant contributions that the journal makes to the recording process except the journal

A debit to an account always indicates an increase in that account.

Which of the following errors, each considered individually, would cause the trial balance to be out of balance?

Posting

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?

Comstock Company provided consulting services and billed the client $2,500.As a result of this event,

A journal provides

Which of the following accounts would likely be listed before the others in a chart of accounts?

An account is often referred to as a T-account because of the way it is constructed.

Howard Company had a transaction that caused a $5,000 increase in both assets and liabilities.This transaction could have been a(n)

The basic form of a journal entry has the

The usual sequence of steps in the transaction recording process is

An investment by the stockholders in a business increases

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

The best interpretation of the word "credit" is the

All business transactions must be entered first in the general ledger.

Which statement about an account is true?

Introduction to Financial Statements

A Further Look at Financial Statements

Accrual Accounting Concepts

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

Understanding Investments in Debt and Equity Securities

Filters