Question 1

Which of the following sequences states the order in which a trial balance lists accounts?

Accepted Answer

A) Equity → Assets → Liabilities 
B) Liabilities → Assets → Equity 
C) Assets → Equity → Liabilities 
D) Assets → Liabilities → Equity 
A) Equity → Assets → Liabilities 
B) Liabilities → Assets → Equity 
C) Assets → Equity → Liabilities 
D) Assets → Liabilities → Equity

Question 2

The following transactions for the month of March have been journalized and posted to the proper accounts. Mar. 1 Martinez invested $9,000 cash in his new design services business.
Mar. 2 Paid the first month's rent of $800.
Mar. 3 Purchased equipment by paying $3,000 cash and executing a note payable for $5,000.
Mar. 4 Purchased office supplies for $750 cash.
Mar. 5 Billed a client for $10,000 of design services completed.
Mar. 6 Received $8,000 on account for the services previously recorded.
What is the ending balance in the Service Revenue account?

Accepted Answer

A) $19,000 
B) $9,000 
C) $10,000 
D) $8,000 
A) $19,000 
B) $9,000 
C) $10,000 
D) $8,000

Question 3

The trial balance is one of the three basic financial statements that are issued to external stakeholders of the business.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following accounts has a normal debit balance?

Accepted Answer

A) Revenue 
B) Notes Payable 
C) Cash 
D) Accounts Payable 
A) Revenue 
B) Notes Payable 
C) Cash 
D) Accounts Payable

Question 5

The higher the debt ratio, the lower the risk.

Accepted Answer

A) True 
 B)False

Question 6

The earnings that result from delivering goods or services to customers are called:

Accepted Answer

A) notes receivable. 
B) unearned revenues. 
C) capital. 
D) revenues. 
A) notes receivable. 
B) unearned revenues. 
C) capital. 
D) revenues.

Question 7

The system of accounting in which every transaction affects at least two accounts is called the double-entry system.

Accepted Answer

A) True 
 B)False

Question 8

A business pays $500 cash for office supplies. Which of the following accounts will be debited?

Accepted Answer

A) Cash 
B) Accounts Payable 
C) Office Supplies 
D) Utilities Expense 
A) Cash 
B) Accounts Payable 
C) Office Supplies 
D) Utilities Expense

Question 9

Calculate the debt ratio using the following trial balance of Carol Instruments as of December 31, 2015.

Accepted Answer

@#IMG-DLM& Debt ratio ꞊ Total

Question 10

The owner of a business withdrew cash for personal use. Which of the following accounts will be credited?

Accepted Answer

A) Smith, Capital 
B) Smith, Withdrawals 
C) Cash 
D) Accounts Payable 
A) Smith, Capital 
B) Smith, Withdrawals 
C) Cash 
D) Accounts Payable

Question 11

Which of the following journal entries would be recorded if a business purchased $800 of office supplies on account?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

When a business makes a cash payment, the Cash account is debited.

Accepted Answer

A) True 
 B)False

Question 13

The ability of a company to repay its liabilities can be determined from its:

Accepted Answer

A) bankers. 
B) creditors. 
C) debt ratio. 
D) journal. 
A) bankers. 
B) creditors. 
C) debt ratio. 
D) journal.

Question 14

For Revenues, the category of account and its normal balance is:

Accepted Answer

A) owner's equity and a credit balance. 
B) assets and a debit balance. 
C) assets and a credit balance. 
D) owner's equity and a debit balance. 
A) owner's equity and a credit balance. 
B) assets and a debit balance. 
C) assets and a credit balance. 
D) owner's equity and a debit balance.

Question 15

When a business records revenue earned, the Revenue account is credited.

Accepted Answer

A) True 
 B)False

Question 16

The percentage of assets that are financed with liabilities can be calculated using the:

Accepted Answer

A) accounting equation. 
B) debt ratio. 
C) journal. 
D) ledger. 
A) accounting equation. 
B) debt ratio. 
C) journal. 
D) ledger.

Question 17

A chart of accounts is a detailed record of the changes in a particular asset, liability, or owner's equity.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is used by both internal and external users to the company?

Accepted Answer

A) chart of accounts 
B) trial balance 
C) balance sheet 
D) costing reports 
A) chart of accounts 
B) trial balance 
C) balance sheet 
D) costing reports

Question 19

Which of the following groups of accounts will decrease with a debit?

Accepted Answer

A) assets and expenses 
B) revenues and expenses 
C) liabilities and owner's equity 
D) assets and liabilities 
A) assets and expenses 
B) revenues and expenses 
C) liabilities and owner's equity 
D) assets and liabilities

Question 20

Debit refers to the right side of the T-account and credit refers to the left side.

Accepted Answer

A) True 
 B)False

Exam 2: Recording Business Transactions

Which of the following sequences states the order in which a trial balance lists accounts?

The trial balance is one of the three basic financial statements that are issued to external stakeholders of the business.

Which of the following accounts has a normal debit balance?

The higher the debt ratio, the lower the risk.

The earnings that result from delivering goods or services to customers are called:

The system of accounting in which every transaction affects at least two accounts is called the double-entry system.

A business pays $500 cash for office supplies. Which of the following accounts will be debited?

Calculate the debt ratio using the following trial balance of Carol Instruments as of December 31, 2015.

The owner of a business withdrew cash for personal use. Which of the following accounts will be credited?

Which of the following journal entries would be recorded if a business purchased $800 of office supplies on account?

When a business makes a cash payment, the Cash account is debited.

The ability of a company to repay its liabilities can be determined from its:

For Revenues, the category of account and its normal balance is:

When a business records revenue earned, the Revenue account is credited.

The percentage of assets that are financed with liabilities can be calculated using the:

A chart of accounts is a detailed record of the changes in a particular asset, liability, or owner's equity.

Which of the following is used by both internal and external users to the company?

Which of the following groups of accounts will decrease with a debit?

Debit refers to the right side of the T-account and credit refers to the left side.

Accounting and the Business Environment

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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