Question 1

The normal balance of a liability account is a debit.

Accepted Answer

A) True 
 B)False

Question 2

The account to be credited is entered first in a journal entry.

Accepted Answer

A) True 
 B)False

Question 3

Transactions recorded in a journal are done in

Accepted Answer

A) account number order. 
B) financial statement order. 
C) alphabetical order. 
D) chronological order.

Question 4

The Deferred Revenue account is classified as a(n)

Accepted Answer

A) asset. 
B) revenue. 
C) expense. 
D) liability.

Question 5

The journal is a chronological record of all transactions.

Accepted Answer

A) True 
 B)False

Question 6

The purchase of an asset for cash

Accepted Answer

A) increases assets and shareholders' equity. 
B) increases assets and liabilities. 
C) decreases assets and increases liabilities. 
D) has no effect on total assets.

Question 7

Crystal Credit recently started work with Carcrashian Ltd.It is her first job and she doesn't have a lot of accounting experience.When recording the sales for the day, she debited sales and credited cash.The entry is

Accepted Answer

A) correct. 
B) an error. 
C) an irregularity. 
D) not necessary.

Question 8

The normal balance of any account is the

Accepted Answer

A) left side. 
B) right side. 
C) side which increases the account. 
D) side which decreases the account.

Question 9

The normal balance of an asset is a credit.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Which of the following guidelines should be applied when choosing an account name to be included in the chart of accounts?

Accepted Answer

A) Account names should identify the nature and content of each account. 
B) Account names should be used consistently. 
C) Account names should use titles and not explanations. 
D) All of the above are correct.

Question 12

A knowledge of the normal balances of accounts would help you spot which of the following as an error in recording?

Accepted Answer

A) a debit balance in the Dividends Declared account 
B) a credit balance in an expense account 
C) a credit balance in a liabilities account 
D) a credit balance in a revenue account

Question 13

Under the double-entry system, revenues must always equal expenses.

Accepted Answer

A) True 
 B)False

Question 14

Shareholders' equity is increased by

Accepted Answer

A) dividends declared. 
B) revenues. 
C) expenses. 
D) liabilities.

Question 15

The double-entry accounting system records the dual effect of each transaction.

Accepted Answer

A) True 
 B)False

Question 16

The usual sequence of steps in the recording process is to

Accepted Answer

A) analyze each transaction, enter the transaction in the journal, and transfer the information to the ledger accounts. 
B) analyze each transaction, enter the transaction in the ledger, and transfer the information to the journal. 
C) analyze each transaction, enter the transaction in the book of accounts, and transfer the information to the journal. 
D) analyze each transaction, enter the transaction in the book of original entry, and transfer the information to the journal.

Question 17

Which one of the following represents the expanded basic accounting equation?

Accepted Answer

A) Assets = Liabilities + Common Shares + Retained Earnings + Revenues - Expenses - Dividends Declared. 
B) Assets + Liabilities = Dividends Declared + Expenses + Common Shares + Revenues. 
C) Assets - Liabilities - Dividends Declared = Common Shares + Revenues - Expenses. 
D) Assets = Revenues + Expenses - Liabilities.

Question 18

Revenues are a subdivision of shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 19

If a revenue account is credited, this must increase shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 20

All transactions

Accepted Answer

A) are entered in the general ledger and then transferred to the general journal. 
B) are non-economic events that are recorded. 
C) are recorded and reported. 
D) are entered in the general journal and posted to the general ledger.

Exam 3: The Accounting Information System

The normal balance of a liability account is a debit.

The account to be credited is entered first in a journal entry.

Transactions recorded in a journal are done in

The Deferred Revenue account is classified as a(n)

The journal is a chronological record of all transactions.

The purchase of an asset for cash

Crystal Credit recently started work with Carcrashian Ltd.It is her first job and she doesn't have a lot of accounting experience.When recording the sales for the day, she debited sales and credited cash.The entry is

The normal balance of any account is the

The normal balance of an asset is a credit.

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

Which of the following guidelines should be applied when choosing an account name to be included in the chart of accounts?

A knowledge of the normal balances of accounts would help you spot which of the following as an error in recording?

Under the double-entry system, revenues must always equal expenses.

Shareholders' equity is increased by

The double-entry accounting system records the dual effect of each transaction.

The usual sequence of steps in the recording process is to

Which one of the following represents the expanded basic accounting equation?

Revenues are a subdivision of shareholders' equity.

If a revenue account is credited, this must increase shareholders' equity.

All transactions