Question 1

The normal balance of a liability account is a debit.

Accepted Answer

A) True 
 B)False

Question 2

When a corporation pays a dividend, the

Accepted Answer

A)  cash account will be increased with a debit.
B)  dividends account will be increased with a credit.
C)  retained earnings account will be directly increased with a debit.
D)  dividends account will be increased with a debit.E) All of the above
F) A) and D)

Question 3

Assets normally show

Accepted Answer

A)  credit balances.
B)  debit balances.
C)  debit and credit balances.
D)  debit or credit balances.E) A) and B)
F) A) and C)

Question 4

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.E) C) and D)
F) B) and D)

Question 5

The ledger accounts should be arranged in

Accepted Answer

A)  date order.
B)  alphabetical order.
C)  financial statement order.
D)  order of appearance in the journal.E) A) and C)
F) C) and D)

Question 6

Which of the following statements is true?

Accepted Answer

A)  Debits increase assets and increase liabilities.
B)  Credits decrease assets and decrease liabilities.
C)  Credits decrease assets and increase liabilities.
D)  Debits increase liabilities and decrease assets.E) B) and C)
F) C) and D)

Question 7

A complete journal entry does not show

Accepted Answer

A)  the date of the transaction.
B)  the new balance in the accounts affected by the transaction.
C)  a brief explanation of the transaction.
D)  the accounts and amounts to be debited and credited.E) B) and C)
F) B) and D)

Question 8

A list of accounts and their account numbers is called the chart of accounts.

Accepted Answer

A) True 
 B)False

Question 9

A trial balance can still balance even if an entry is posted to the wrong account.

Accepted Answer

A) True 
 B)False

Question 10

If a company has overdrawn its bank balance, then

Accepted Answer

A)  the cash account will show a debit balance.
B)  the cash account will show a credit balance.
C)  the cash account debits will exceed the cash account credits.
D)  this cannot be detected by observing the balance of the cash account.E) C) and D)
F) A) and D)

Question 11

The purchase of an asset on credit

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.E) C) and D)
F) B) and D)

Question 12

Which of the following correctly identifies the normal balances of accounts?

Accepted Answer

The answer of Which of the following correctly identifies the...

Question 13

Management could determine the amounts due from customers by examining which ledger account?

Accepted Answer

A)  Service Revenue
B)  Accounts Payable
C)  Accounts Receivable
D)  SuppliesE) B) and D)
F) All of the above

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not true of the terms debit and credit?

Accepted Answer

A)  They can be abbreviated as Dr.and Cr.
B)  They can be interpreted to mean increase and decrease.
C)  They can be used to describe the balance of an account.
D)  They can be interpreted to mean left and right.E) B) and D)
F) B) and C)

Question 16

An accounting report that lists all assets, liabilities, and shareholders' equity accounts and their balances at a specific date is called a

Accepted Answer

A)  trial balance.
B)  general journal.
C)  general ledger.
D)  chart of accounts.E) C) and D)
F) A) and D)

Question 17

The classification and normal balance of the retained earnings account is

Accepted Answer

A)  asset, debit.
B)  shareholders' equity, credit.
C)  revenues, credit.
D)  liability, debit.E) A) and B)
F) All of the above

Question 18

The name given to entering transaction data in the journal is

Accepted Answer

A)  transacting.
B)  listing.
C)  posting.
D)  journalizing.E) C) and D)
F) All of the above

Question 19

A credit means that an account has been increased.

Accepted Answer

A) True 
 B)False

Question 20

If the totals of a trial balance are not equal, it could be due to

Accepted Answer

A)  a failure to record or post a transaction.
B)  recording the same incorrect amount for both the debit and the credit parts of a transaction.
C)  an error in calculating the account balances.
D)  recording the transaction more than once.E) A) and B)
F) None of the above

Exam 3: The Accounting Information System

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

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The purchase of an asset for cash

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If the totals of a trial balance are not equal, it could be due to

Correct AnswerverifiedShow Answer

The classification and normal balance of the retained earnings account is

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The name given to entering transaction data in the journal is

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An accounting report that lists all assets, liabilities, and shareholders' equity accounts and their balances at a specific date is called a

Correct AnswerverifiedShow Answer

Which of the following statements is true?

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The normal balance of a liability account is a debit.

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A trial balance can still balance even if an entry is posted to the wrong account.

Correct AnswerverifiedShow Answer

The ledger accounts should be arranged in

Correct AnswerverifiedShow Answer

Assets normally show

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A credit means that an account has been increased.

Correct AnswerverifiedShow Answer

If a company has overdrawn its bank balance, then

Correct AnswerverifiedShow Answer

Which of the following correctly identifies the normal balances of accounts?

Correct AnswerverifiedShow Answer

The purchase of an asset on credit

Correct AnswerverifiedShow Answer

When a corporation pays a dividend, the

Correct AnswerverifiedShow Answer

Management could determine the amounts due from customers by examining which ledger account?

Correct AnswerverifiedShow Answer

Which of the following is not true of the terms debit and credit?

Correct AnswerverifiedShow Answer

A list of accounts and their account numbers is called the chart of accounts.

Correct AnswerverifiedShow Answer

A complete journal entry does not show

Correct AnswerverifiedShow Answer

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