Question 1

Which of the following accounts increases with a credit?

Accepted Answer

A) Cash 
B) Owner,Capital 
C) Accounts Receivable 
D) Prepaid Expense 
A) Cash 
B) Owner,Capital 
C) Accounts Receivable 
D) Prepaid Expense

Question 2

A posting reference column is used ________.

Accepted Answer

A) while preparing the trial balance using the ledger 
B) when the information is transferred from the journal to the ledger 
C) when the information is transferred from the ledger to the post-closing trial balance 
D) while preparing the balance sheet using the trial balance 
A) while preparing the trial balance using the ledger 
B) when the information is transferred from the journal to the ledger 
C) when the information is transferred from the ledger to the post-closing trial balance 
D) while preparing the balance sheet using the trial balance

Question 3

Which of the following is the correct formula to calculate the debt ratio?

Accepted Answer

A) Debt ratio = Total liabilities × Total assets 
B) Debt ratio = Total liabilities + Total assets 
C) Debt ratio = Total liabilities - Total assets 
D) Debt ratio = Total liabilities / Total assets 
A) Debt ratio = Total liabilities × Total assets 
B) Debt ratio = Total liabilities + Total assets 
C) Debt ratio = Total liabilities - Total assets 
D) Debt ratio = Total liabilities / Total assets

Question 4

The first step in the journalizing and posting process is to ________.

Accepted Answer

A) post the journal entry to the ledger 
B) identify the accounts involved and the account type 
C) decide whether each account increases or decreases 
D) record the transaction in the journal 
A) post the journal entry to the ledger 
B) identify the accounts involved and the account type 
C) decide whether each account increases or decreases 
D) record the transaction in the journal

Question 5

Which of the following statements is true of expenses?

Accepted Answer

A) Expenses increase equity,so an expense account's normal balance is a credit balance. 
B) Expenses decrease equity,so an expense account's normal balance is a credit balance. 
C) Expenses increase equity,so an expense account's normal balance is a debit balance. 
D) Expenses decrease equity,so an expense account's normal balance is a debit balance. 
A) Expenses increase equity,so an expense account's normal balance is a credit balance. 
B) Expenses decrease equity,so an expense account's normal balance is a credit balance. 
C) Expenses increase equity,so an expense account's normal balance is a debit balance. 
D) Expenses decrease equity,so an expense account's normal balance is a debit balance.

Question 6

Transactions are first record in a ________.

Accepted Answer

A) chart of accounts 
B) trial balance 
C) journal 
D) ledger 
A) chart of accounts 
B) trial balance 
C) journal 
D) ledger

Question 7

For Office Supplies,the category of account and its normal balance is ________.

Accepted Answer

A) liabilities and a debit balance 
B) assets and a debit balance 
C) liabilities and a credit balance 
D) assets and a credit balance 
A) liabilities and a debit balance 
B) assets and a debit balance 
C) liabilities and a credit balance 
D) assets and a credit balance

Question 8

Accounts Receivable is a(n)________ account and has a normal ________ balance.

Accepted Answer

A) liability;debit 
B) asset;debit 
C) liability;credit 
D) asset;credit 
A) liability;debit 
B) asset;debit 
C) liability;credit 
D) asset;credit

Question 9

The owner's claim to the assets of a business is called equity or owner's equity.

Accepted Answer

A) True 
 B)False

Question 10

A business borrows cash by signing a note payable.Which of the following accounts is credited?

Accepted Answer

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

Question 11

The owner withdrew cash from the business.Which of the following accounts is credited?

Accepted Answer

A) Common Stock 
B) Dividends 
C) Cash 
D) Accounts Payable 
A) Common Stock 
B) Dividends 
C) Cash 
D) Accounts Payable

Question 12

Which of the following is a source document that provides the evidence and data for accounting transactions?

Accepted Answer

A) Journal 
B) Sales invoice 
C) Ledger 
D) Trial balance 
A) Journal 
B) Sales invoice 
C) Ledger 
D) Trial balance

Question 13

A business purchases equipment by paying $6,081 in cash and issuing a note payable of $12,291.Which of the following occurs?

Accepted Answer

A) Cash is credited for $6,081,Equipment is credited for $18,372,and Notes Payable is debited for $12,291. 
B) Cash is credited for $6,081,Equipment is debited for $18,372,and Notes Payable is credited for $12,291. 
C) Cash is debited for $6,081,Equipment is debited for $12,291,and Notes Payable is credited for $18,372. 
D) Cash is debited for $6,081,Equipment is credited for $12,291,and Notes Payable is debited for $6,210. 
A) Cash is credited for $6,081,Equipment is credited for $18,372,and Notes Payable is debited for $12,291. 
B) Cash is credited for $6,081,Equipment is debited for $18,372,and Notes Payable is credited for $12,291. 
C) Cash is debited for $6,081,Equipment is debited for $12,291,and Notes Payable is credited for $18,372. 
D) Cash is debited for $6,081,Equipment is credited for $12,291,and Notes Payable is debited for $6,210.

Question 14

An accounting entry that is characterized by having multiple debits and/or multiple credits is called a ________ entry.

Accepted Answer

A) balanced 
B) posted 
C) chart of accounts 
D) compound journal 
A) balanced 
B) posted 
C) chart of accounts 
D) compound journal

Question 15

The Accounts Receivable account of Rosewood Company has the following postings:  
Calculate the ending balance of the account.

Accepted Answer

A) $33,000 debit 
B) $27,000 debit 
C) $6,000 credit 
D) $21,000 debit 
A) $33,000 debit 
B) $27,000 debit 
C) $6,000 credit 
D) $21,000 debit

Question 16

Which of the following sequences is the normal sequence of flow of accounting data?

Accepted Answer

A) Ledger → Journal → Source document 
B) Journal → Source document → Ledger 
C) Source document → Journal → Ledger 
D) Source document → Ledger → Journal 
A) Ledger → Journal → Source document 
B) Journal → Source document → Ledger 
C) Source document → Journal → Ledger 
D) Source document → Ledger → Journal

Question 17

Which of the following is a financial statement that presents a business's accounting equation?

Accepted Answer

A) Chart of Accounts 
B) Trial Balance 
C) Income Statement 
D) Balance Sheet 
A) Chart of Accounts 
B) Trial Balance 
C) Income Statement 
D) Balance Sheet

Question 18

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 19

A journal entry for a $70 payment for rent expense was posted as a debit to Salaries Expense and a credit to Cash.Which of the following statements correctly states the effect of the error on the trial balance?

Accepted Answer

A) The sum of the credits will equal the sum of the debits. 
B) The sum of the debits will exceed the sum of the credits by $70. 
C) The sum of the debits will exceed the sum of the credits by $140. 
D) The sum of the credits will exceed the sum of the debits by $140. 
A) The sum of the credits will equal the sum of the debits. 
B) The sum of the debits will exceed the sum of the credits by $70. 
C) The sum of the debits will exceed the sum of the credits by $140. 
D) The sum of the credits will exceed the sum of the debits by $140.

Question 20

The debt ratio shows the proportion of assets financed with debt.

Accepted Answer

A) True 
 B)False

Exam 2: Recording Business Transactions

Which of the following accounts increases with a credit?

A posting reference column is used ________.

Which of the following is the correct formula to calculate the debt ratio?

The first step in the journalizing and posting process is to ________.

Which of the following statements is true of expenses?

Transactions are first record in a ________.

For Office Supplies,the category of account and its normal balance is ________.

Accounts Receivable is a(n)________ account and has a normal ________ balance.

The owner's claim to the assets of a business is called equity or owner's equity.

A business borrows cash by signing a note payable.Which of the following accounts is credited?

The owner withdrew cash from the business.Which of the following accounts is credited?

Which of the following is a source document that provides the evidence and data for accounting transactions?

A business purchases equipment by paying $6,081 in cash and issuing a note payable of $12,291.Which of the following occurs?

An accounting entry that is characterized by having multiple debits and/or multiple credits is called a ________ entry.

The Accounts Receivable account of Rosewood Company has the following postings: Calculate the ending balance of the account.

Which of the following sequences is the normal sequence of flow of accounting data?

Which of the following is a financial statement that presents a business's accounting equation?

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

A journal entry for a $70 payment for rent expense was posted as a debit to Salaries Expense and a credit to Cash.Which of the following statements correctly states the effect of the error on the trial balance?

The debt ratio shows the proportion of assets financed with debt.

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

Filters

Accounts Receivable is a(n) account and has a normal balance.