Test_Bank_for_College_Accounting_Chapters_1-24_11th_Edition_by_Nobles_sample_chapter

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Chapter 2 — T Accounts, Debits and Credits, Trial Balance, and Financial Statements MULTIPLE CHOICE 1. The normal balance of an account is on the a. plus side. b. left side. c. debit side. d. right side. e. credit side. ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 2. When a T account has several items on both sides, the balance of the account is written a. on the side with the greatest number of items. b. on the side with the least number of items. c. on the side with the larger total. d. on the side with the smaller total. e. in none of these locations. ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-1 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 3. A debit may signify a decrease in a(n) a. liability account. b. asset account. c. revenue account. d. liability and a revenue account. e. asset and a revenue account. ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 4. A debit may result in a. an increase in an expense account. b. an increase in an asset account. c. a decrease in a liability account. d. a decrease in a revenue account. e. all of these. ANS: E PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 5. A credit may result in a. an increase in a liability account.
b. an increase in a revenue account. c. a decrease in an asset account. d. an increase in the Capital account. e. all of these. ANS: E PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 6. A credit may result in a. an increase in an asset account. b. a decrease in the Capital account. c. an increase in a liability account. d. a decrease in a liability account. e. none of these. ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 7. Which of the following classifications of accounts has/have a normal credit balance? a. Drawing b. Revenues c. Liabilities d. Revenues and liabilities e. All of these ANS: D PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 | LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 8. Which of the following describes the classification and normal balance of H. Gale, Capital? a. Asset, debit b. Revenue, credit c. Owner's equity, debit d. Expense, debit e. None of these ANS: E PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 | LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Knowledge 9. Which of the following describes the classification and normal balance of the Income from Services account? a. Capital, debit b. Revenue, credit c. Asset, credit d. Asset, debit e. Expense, debit ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 | LO: 2-3 NAT: AACSB: Reflective Thinking
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STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Knowledge 10. Which of the following is an asset account? a. Insurance Expense b. Advertising Expense c. Office Equipment d. Sales e. None of these ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Knowledge 11. The second step in the analytical phase of accounting is a. to determine whether there is an increase or a decrease in the accounts. b. to determine which accounts are involved. c. to formulate the entry as a debit to one account and as a credit to another account. d. to identify the classification of the accounts involved. e. none of these. ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 12. If a $47 cash purchase of supplies is recorded as a $57 debit to Supplies Expense and a $57 credit to Cash, the result will be that a. the trial balance will be out of balance. b. the Supplies Expense account will be understated. c. the Cash account will be overstated. d. Supplies Expense will be overstated and Supplies will be understated. e. none of these will be true. ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 13. A purchase of supplies on account should be recorded as a. a debit to Supplies and a credit to Cash. b. a debit to Accounts Payable and a credit to Supplies. c. a debit to Supplies and a credit to Accounts Payable. d. a debit to Supplies Expense and a credit to Accounts Receivable. e. none of these. ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 14. A business buys office equipment for cash. What effect will this transaction have on the accounts? a. Debit an asset account and credit an expense account b. Debit an asset account and credit an asset account c. Debit an expense account and credit an asset account d. Debit a liability account and credit an asset account
e. None of these ANS: B PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 15. The receipt of cash on account from a customer should be recorded as a. a debit to Cash and a credit to Accounts Payable. b. a debit to Cash and a credit to Income from Services. c. a debit to Cash and a credit to Accounts Receivable. d. a debit to Cash and a credit to the Capital account. e. none of these. ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 16. The asset that a business enterprise creates when it maintains accounts for its charge customers is a. Accounts Payable. b. Drawing. c. Accounts Receivable. d. Capital. e. none of these. ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Comprehension 17. Which of the following entries records the withdrawal of cash for personal use by D. Bill, the owner of a business? a. Debit Cash and credit D. Bill, Drawing b. Debit Cash and credit Salary Expense c. Debit Salary Expense and credit Cash d. Debit D. Bill, Drawing and credit Cash e. None of these ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 18. A trial balance is a. a listing of all the assets, liabilities, and owner's equity accounts that have balances. b. a listing of all the accounts that have zero balances. c. a listing of all the revenue and expense accounts that have balances. d. all of these. e. none of these. ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge
19. To locate an error in a trial balance, a. re-add. b. look for the correct location of normal balances. c. verify figures transferred from the account to the trial balance. d. check footings and balances of the accounts. e. do all of these. ANS: E PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 20. The trial balance will not expose which of the following problems? a. Recording half an entry b. Leaving out an entire entry c. Recording both halves of an entry on the same side d. Recording half an entry and leaving out an entire entry e. Recording half an entry and recording both halves of an entry on the same side ANS: B PTS: 1 DIF: Difficulty: Challenging OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 21. The Accounts Receivable T account shows the following $250, debit $1,250, debit $300, credit $250, credit What is the balance of the account? a. $1,500, debit b. $550, credit c. $950, debit d. $950, credit e. $2,050, debit ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-1 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 22. The Accounts Payable T account shows the following $1,200, debit $3,500, debit $8,240, credit $100, credit What is the balance of the account? a. $8,340, credit b. $8,340, debit c. $4,700, debit d. $3,640, debit
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e. $3,640, credit ANS: E PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-1 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 23. The ___________ are the totals of each side of a T account that is normally recorded in small, pencil-written figures. a. balances b. footings c. figures d. estimates ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 24. Which of the following is correct concerning a T account? a. The left side is the decrease side for assets. b. The right side is the decrease side for liabilities. c. The right side is the increase side for revenue. d. The left side is the decrease side for expenses. ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-2 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 25. Which of the following is not true concerning T accounts? a. The right side of a revenue account is an increase. b. The left side of an expense account is an increase. c. The left side of an asset account is an increase. d. The left side of a liability account is an increase. ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-2 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 26. Which of the following is correct? a. Debit is the normal balance of the accounts payable account. b. Credit is the normal balance of the accounts receivable account. c. Debit is the normal balance of the Income from Services account. d. Debit is the normal balance of the Drawing account. ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-1 |LO: 2-2 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 27. Which of the following is true? a. An asset account would be decreased with a debit. b. A liability account would be increased with a debit.
c. A revenue account would be increased with a credit. d. An expense account would be increased with a credit. ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 28. Which of the following is not true? a. The capital account would be increased with a debit. b. The drawing account would be increased with a debit. c. An asset account would be decreased with a credit. d. A liability account would be increased with a credit. ANS: A PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 29. The last step in analyzing a business transaction is a. decide which accounts are involved. b. check to see if the equation is in balance. c. write the transaction as a debit and credit. d. classify the accounts involved. ANS: B PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 30. Ready Company received a bill for advertising. The accountant would record a a. credit to cash. b. credit to accounts receivable. c. credit to accounts payable. d. credit to advertising expense. ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 31. Which of the following is correct, assuming the following transaction: R. Dirk invested $20,000 cash in the business. a. Cash is debited. b. Cash is credited. c. R. Dirk, Capital is debited. d. Income from Services is credited. ANS: A PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 32. Which of the following is correct, assuming the following transaction: Kennedy Company received and paid the rent for the month.
a. Rent Expense is debited. b. Cash is debited. c. Rent Expense is credited. d. Accounts Payable is debited. ANS: A PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 33. Which of the following is correct, assuming the following transaction: Nixon Company sold services on account. a. Cash is credited. b. Accounts Receivable is credited. c. Income from Services is credited. d. Cash is debited. ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 34. Jackson Company received cash on account from customers, $2,300. The accountant would record a a. debit to income from services, $2,300. b. credit to income from services, $2,300. c. debit to accounts receivable, $2,300. d. credit to accounts receivable, $2,300. e. credit to cash, $2,300. ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 35. A _______________ is a transaction that requires more than one debit or more than one credit to be recorded. a. complex entry b. double entry c. deluxe entry d. compound entry ANS: D PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 36. Income from Services would be shown on the ______________. a. debit side of the trial balance b. credit side of the trial balance c. not on the trial balance d. on both the debit and credit side of the trial balance ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions
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KEY: Bloom's: Comprehension 37. Utilities Expense would be shown on the ______________. a. debit side of the trial balance b. credit side of the trial balance c. not on the trial balance d. debit and credit side of the trial balance ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 38. Accounts Receivable would be shown on the __________________. a. debit side of the trial balance b. credit side of the trial balance c. not on the trial balance d. debit and credit side of the trial balance ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 39. Accounts Payable would be shown on the ___________________. a. debit side of the trial balance b. credit side of the trial balance c. not on the trial balance d. debit and credit side of the trial balance ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 40. The heading of all financial statements include a. name of the company b. title of the financial statement c. period of time covered by the financial statement d. all of the answers listed ANS: D PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Knowledge 41. The ____________ shows total revenue minus total expenses. a. balance sheet b. income statement c. statement of owner’s equity d. cash flow statement ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Knowledge
42. When total expenses exceeds total revenues, a __________ results. a. net income b. net loss c. break-even d. profit ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Comprehension 43. The time period on the ______________ represents only one date. a. income statement b. statement of owner’s equity c. balance sheet d. none of the answers listed ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Comprehension 44. Davis Company has the following accounts and balances at the end of the year: Cash, $1,200 Accounts Receivable, $280 Office Equipment, $3,000 Accounts Payable, $1,400 Income from Services, $3,500 Rent Expense, $670 Salaries Expense, $1,000 R. Davis, Capital at the beginning of the year was $2,050. Rob Davis also withdrew $800 from the company during the year. What is net income for the year? a. $1,830 b. $3,500 c. $1,030 d. $5,080 ANS: A PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Application 45. Davis Company has the following accounts and balances at the end of the year: Cash, $1,200 Accounts Receivable, $280 Office Equipment, $3,000 Accounts Payable, $1,400 Income from Services, $3,500 Rent Expense, $670 Salaries Expense, $1,000 R. Davis, Capital at the beginning of the year was $2,050. Rob Davis also withdrew $800 from the company during the year. What is R. Davis, Capital, at the end of the year? a. $1,830 b. $3,080
c. $5,550 d. $3,880 ANS: B PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Application 46. Davis Company has the following accounts and balances at the end of the year: Cash, $1,200 Accounts Receivable, $280 Office Equipment, $3,000 Accounts Payable, $1,400 Income from Services, $3,500 Rent Expense, $670 Salaries Expense, $1,000 R. Davis, Capital at the beginning of the year was $2,050. Rob Davis also withdrew $800 from the company during the year. What is the amount of total assets reported on the balance sheet? a. $1,480 b. $9,800 c. $3,080 d. $4,480 ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Application 47. The ________________ shows how and why the owner’s equity account has changed over a stated period of time. a. balance sheet b. income statement c. statement of owner’s equity d. statement of change ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Comprehension 48. The ________________ shows the financial position of a company. a. income statement b. balance sheet c. statement of owner’s equity d. none of the answers listed ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Knowledge 49. The _____________ of the balance sheet requires that the assets are placed at the top and liabilities and owner’s equity are placed below. a. financial position b. report form c. horizontal form d. vertical form
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ANS: B PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Comprehension 50. Which of the following is correct concerning the time period reported on financial statements? a. The balance sheet is reported as of a period of time. b. The income statement is reported as of a specific date. c. The statement of owner’ s equity is reported as of a specific date. d. The income statement is reported as of a period of time. ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Comprehension 51. Accounts Payable is reported on which financial statement? a. balance sheet b. income statement c. statement of owner’s equity d. none of the answers listed ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Knowledge 52. Income from Services is reported on which financial statement? a. income statement b. statement of owner’s equity c. balance sheet d. none of the answers listed ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Knowledge 53. Rent Expense is reported on which financial statement? a. income statement b. balance sheet c. statement of owner’s equity d. none of the answers listed ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Knowledge 54. Owner withdrawals are reported on which financial statement? a. statement of owner’s equity b. balance sheet c. income statement d. none of the answers listed ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Knowledge 55. The order the financial statements are prepared is as follows:
a. statement of owner’s equity, income statement, balance sheet b. income statement, balance sheet, statement of owner’s equity c. income statement, statement of owner’s equity, balance sheet d. balance sheet, income statement, statement of owner’s equity ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Comprehension 56. The _______________ of a company is the resources owned by the organization at a point in time, offset by the claims against those resource s and owner’s equity. a. net income b. financial statement c. net loss d. financial position ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Comprehension 57. A ______________ means that the digits of a number have been switched around. a. slide b. matching error c. transposition d. none of the answers listed ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-7 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 58. The accountant recorded accounts payable as $45,000 when it should have been recorded as $4,500. This is an example of a ________________. a. matching error b. footing c. slide d. transposition ANS: C PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-7 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 59. Errors can occur for which of the following reason(s)? a. Arithmetic b. Recording only half an entry c. Recording two debits and no credits d. Recording incorrect amounts e. All of the answers listed ANS: E PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-7 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension
60. The accountant recorded income from services as $4,500 when it should have been recorded as $4,050. This is an example of a ________________. a. matching error b. footing c. slide d. transposition ANS: D PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-7 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application TRUE/FALSE 61. A credit always means an entry on the right side of an account. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 62. An increase in an expense is recorded as a debit. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 63. An account balance is the difference between total debits and total credits in an account. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 64. An entry to Accounts Payable will be on the left side of the account if there is a decrease and on the right side of the account if there is an increase. ANS: T PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 65. A credit signifies increases in liabilities, capital, and revenue, and decreases in assets, drawing, and expenses. ANS: T PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 66. Revenue has the effect of decreasing owner's equity.
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ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 67. The left side is always the debit side. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 68. Accounts Receivable is an asset account whose normal balance is a credit. ANS: F PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-1 | LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 69. In any transaction, the total dollar amount of debits must equal the total dollar amount of credits. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 70. If equipment costing $930 is bought by paying $300 as a down payment and the remaining $630 in 30 days, owner's equity is increased by $930. ANS: F PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 71. A transaction with more than one debit and/or more than one credit is called a compound entry. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 72. Withdrawals of assets from a business by the owners are considered to be expenses. ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 73. If equipment is bought by paying $200 as a down payment and the remaining $400 in 30 days, total liabilities are increased by $200. ANS: F PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions
KEY: Bloom's: Application 74. A verification of the equality of debits and credits in the ledger at the end of a fiscal period is called a balance sheet . ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 75. A trial balance checks the equality of debits and credits. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 76. The connecting link between the statement of owner's equity and the balance sheet is the owner's withdrawals. ANS: F PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Comprehension 77. Recording $520 as $5.20 is an example of a slide. ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-7 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 78. Recording $41.25 as $412.50 is an example of a transposition. ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-7 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application MATCHING Match the terms below with the correct definitions. a. Trial balance b. Normal balance c. Trial balance error d. Transposition e. Credit f. Trial balance account order g. Footing h. Debit i. Compound entry 79. Plus side of any T account 80. Totaling each side of a T account
81. Listing of the ending balances of all ledger accounts that proves the equality of total debits and credits 82. A recording error involving the switching around of the digits of a number 83. The left side of a T account 84. Inequality of the total debits and credits in the trial balance 85. A, L, OE, R, E 86. The right-hand side of a T account 87. Transaction that has two or more debits and/or credits 79. ANS: B PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 80. ANS: G PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 81. ANS: A PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 82. ANS: D PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-7 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 83. ANS: H PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 84. ANS: C PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 85. ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 86. ANS: E PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge 87. ANS: I PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-4 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Knowledge OTHER Classification 88. Indicate whether each of the following changes in accounts would be a debit (D) or credit (C) entry. To decrease Cash
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To increase Owner, Capital To decrease Accounts Payable To increase Salaries Expense To decrease Equipment To increase Revenue To decrease Accounts Receivable To increase Owner, Drawing To increase Prepaid Insurance To increase Accounts Payable ANS: C To decrease Cash C To increase Owner, Capital D To decrease Accounts Payable D To increase Salaries Expense C To decrease Equipment C To increase Revenue C To decrease Accounts Receivable D To increase Owner, Drawing D To increase Prepaid Insurance C To increase Accounts Payable PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 89. Classify each of the following items as to whether they would appear on a balance sheet (BS), income statement (IS), or neither (N). Accounts Payable Accounts Receivable Advertising Expense Cash Equipment Income from Tours Increase in Capital Investment during month J. Collins, Capital J. Collins, Drawing Prepaid Insurance Wages Expense ANS: BS Accounts Payable BS Accounts Receivable IS Advertising Expense BS Cash BS Equipment
IS Income from Tours N Increase in Capital N Investment during month BS J. Collins, Capital N J. Collins, Drawing BS Prepaid Insurance IS Wages Expense PTS: 1 DIF: Difficulty: Challenging OBJ: LO: 2-6 NAT: AACSB: Reflective Thinking STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Comprehension SHORT ANSWER 90. What is meant when we say that revenue and expenses fall under the umbrella of owner's equity? Why does revenue have the same placement of plus and minus signs as the Capital account, and why do expenses have the opposite placement of plus and minus signs as does the Capital account? ANS: Revenue is said to fall under the umbrella of owner's equity because revenue represents amounts earned by the business. Earnings serve to increase the owner's investment. Consequently, the placement of the plus and minus signs for revenue should be the same as that for Capital. Expenses are said to fall under the umbrella of owner's equity because expenses represent the costs of earning the revenue or doing business. Consequently, expenses are deductions from revenue and, as such, the placement of the plus and minus signs is the opposite of that for revenue, which also makes them the opposite of Capital. PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-2 NAT: AACSB: Communication STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Comprehension 91. Explain how the Drawing account differs from an expense account. ANS: The Drawing account is the opposite of an investment by the owner and records personal use of owner. An expense is a cost related to the earning of revenue or the cost of doing business. In both cases, there is usually a decrease to Cash. PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-4 NAT: AACSB: Communication STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Comprehension 92. List in order of preparation and explain the purpose of the three main financial statements, including what is on each statement. ANS: Income Statement Shows total revenue minus total expense, which yields the net income or net loss. Statement of Owner's Equity Show how and why the owner's equity, or Capital, account has changed over the stated period of time. Includes net income or loss, investments, and withdrawals. Balance Sheet Shows financial position including assets, liabilities, and owner's equity as of one particular date.
PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6 NAT: AACSB: Communication STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Comprehension 93. Explain the trial balance, including when and why it is prepared. ANS: The trial balance is a listing of all account balances proving that debits equal credits. It is prepared prior to preparing financial statements. PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-5 NAT: AACSB: Communication STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Comprehension 94. List the main categories of accounts (as provided in a typical chart of accounts) and provide their specific normal balance. ANS: Assets (DR), Liabilities (CR), Equity Capital (CR), Equity Drawing (DR), Revenue (CR), and Expenses (DR). PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-3 NAT: AACSB: Communication STA: AICPA-FN: Measurement|ACBSP: GAAP KEY: Bloom's: Comprehension PROBLEM 95. Judy Kliskey owns the firm called Mother Nature's. She had the following transactions: a. Kliskey deposited $15,000 in the bank in the name of the business. b. Paid rent for the month, $820. c. Purchased office furniture on account from Osborn Office Supply, $2,640. d. Kliskey invested her personal computer and printer having a fair market value of $5,250. e. Bought office supplies on account from DeClerk Stationery, $1,620, and paid $480 as a down payment. f. Received $3,240 for services. g. Received and paid telephone bill, $180. h. Paid Osborn Office Supply $1,450 to apply on account. i. Billed clients for services, $2,210. j. Kliskey withdrew $1,540 for personal use. k. Received $1,420 from clients billed previously. The transactions were recorded in T accounts as shown below. Cash Accounts Payable Rent Expense (a) 15,000 (b) 820 (c) 2,640 (e) 480 (b) 820 (k) 1,420 (e) 1,140 (h) 1,450 (g) 180 (h) 1,450 (j) 1,540
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Accounts Receivable J. Kliskey, Capital Telephone Expense (f) 3,240 (j) 1,540 (a) 15,000 (g) 180 (i) 2,210 (d) 5,250 Supplies J. Kliskey, Drawing Office Equipment (e) 1,620 (d) 5,250 Income from Services Office Furniture (i) 2,210 (f) 1,420 (c) 2,640 Instructions: Find seven errors made in recording the transactions, and state the account and amount that should have been debited and the account and amount that should have been credited. ANS: (1) Transaction c should have debited Office Furniture $2,640 and credited Accounts Payable $2,640. (2) Transaction e should have debited Supplies $1,620, credited Cash $480, and credited Accounts Payable $1,140. (3) Transaction f should have debited Cash $3,240 and credited Income from Services $3,240. (4) Transaction h should have debited Accounts Payable $1,450 and credited Cash $1,450. (5) Transaction i should have debited Accounts Receivable $2,210 and credited Professional Fees $2,210. (6) Transaction j should have debited J. Kliskey, Drawing $1,540 and credited Cash $1,540. (7) Transaction k should have debited Cash $1,420 and credited Accounts Receivable $1,420. PTS: 1 DIF: Difficulty: Challenging OBJ: LO: 2-4 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application 96. The accounts and their balances as of December 31 of this year for Fast Delivery Service are presented below. Accounts Receivable $ 9,051 Accounts Payable 63,776 Advertising Expense 2,055 B. Dunn, Capital 68,162 B. Dunn, Drawing 10,700 Cash 20,087 Equipment 100,700 Income from Delivery Services 37,394 Insurance Expense 1,967 Rent Expense 10,900 Supplies 1,515 Utilities Expense 2,342 Wages Expense 10,015
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Instructions: 1. Prepare an income statement for the year ended December 31. 2. Prepare a statement of owner's equity for the year ended December 31. 3. Prepare a balance sheet as of December 31. ANS: Fast Delivery Service Income Statement For Year Ended December 31, 20 Revenue: Income from Delivery Services $37,394 Expenses: Rent Expense $10,900 Wages Expense 10,015 Advertising Expense 2,055 Utilities Expense 2,342 Insurance Expense 1,967 Total Expenses 27,279 Net Income $ 10,115 Fast Delivery Service Statement of Owner's Equity For Year Ended December 31, 20 B. Dunn, Capital, January 1 $68,162 Net Income for the Year $ 10,115 Less Withdrawals for the Year 10,700 Decrease in Capital (585) B. Dunn, Capital, December 31 $67,577 Fast Delivery Service Balance Sheet December 31, 20 Assets Cash $ 20,087 Accounts Receivable 9,051 Supplies 1,515 Equipment 100,700 Total Assets $131,353 Liabilities Accounts Payable $ 63,776 Owner's Equity B. Dunn, Capital 67,577 Total Liabilities and Owner's Equity $131,353 PTS: 1 DIF: Difficulty: Moderate OBJ: LO: 2-6 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Financial Statements KEY: Bloom's: Application
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97. During the first month of operation, Sasha’s Massage experienced the following transactions a.) Owner deposited $20,000 in a bank account in the name of the business. b.) Bought equipment on account $1,250. c.) Paid cash for desk, $525, Ck. No. 100. d.) Received and paid bill for advertising, $740, Ck. No.101 e.) Bought supplies on account, $300 Ck. No. 102. f.) Sold professional services on account, $300. g.) Received and paid the telephone and internet bill, $125, Ck. No. 103. h.) Paid $500 on account for purchased equipment, Ck. No. 104. i.) Sold professional services for cash. $250. j.) Tasha withdrew cash for personal use, $600, Ck. No. 105. k.) Paid wages to employee, $425, Ck. No. 106. l.) Tasha invested personal massage chair with a fair market value of $910 in the business m.) Sold professional services for cash. $150. n.) Sold professional services on account, $225. o.) Received cash on account from customer, $300. Cash Accounts Payable Massage Fees Accounts Receivable Sasha Towers, Capital Advertising Expense Supplies Expense Sasha Towers, Drawing Utilities Expense Equipment Wages Expense Instructions: 1. Record transactions in appropriate t-accounts and label with provided letter. 2. Foot and balance accounts. 3. Prepare trial balance dated December 31, 20 . ANS: Cash Accounts Payable Massage Fees a.) 20,000 c.) 525 h.) 500 b.) 1,250 f.) 300 i.) 250 d.) 740 e.) 300 i.) 250 m.) 150 g.) 125 Bal. 1,050 m.) 150 o.) 300 h.) 500 n.) 225 j.) 600 Bal. 925
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k.) 425 Bal. 17,785 Accounts Receivable Sasha Towers, Capital Advertising Expense f.) 300 o.) 300 a.) 20,000 d.) 740 n.) 225 l.) 910 Bal. 740 Bal. 225 Bal. 20,910 Supplies Sasha Towers, Drawing Utilities Expense e.) 300 j.) 600 g.) 125 Bal. 300 Bal. 600 Bal. 125 Equipment Wages Expense b.) 1,250 k.) 425 c.) 525 Bal. 425 l.) 910 Bal. 2,685 Sasha’s Massage Trial Balance December 31, 20 Cash 17,785 Accounts Receivable 225 Supplies 300 Equipment 2,685 Accounts Payable 1,050 Sasha Tower, Capital 20,910 Sasha Tower, Drawing 600 Massage Fees 925 Advertising Expense 740 Utilities Expense 125 Wages Expense 425 Totals 22,885 22,885 PTS: 1 DIF: Difficulty: Challenging OBJ: LO: 2-4 | LO: 2-5 NAT: AACSB: Analytic STA: AICPA-FN: Measurement|ACBSP: Recording Transactions KEY: Bloom's: Application
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Current Attempt in Progress Data relating to the balances of various accounts affected by adjusting or closing entries appear below. (The entries which caused the changes in the balances are not given.) You are asked to supply the missing journal entries which would logically account for the changes in the account balances. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Interest receivable at 1/1/20 was $1,410. During 2020 cash received from debtors for interest on outstanding notes receivable amounted to $4,820. The 2020 income statement showed interest revenue in the amount of $8,950. You are to 1. provide the missing adjusting entry that must have been made, assuming reversing entries are not made. Unearned rent at 1/1/20 was $5,290 and at 12/31/20 was $8,400. The records indicate cash receipts from rental sources during 2020 amounted to $52,500, all of which was credited to the Unearned Rent Revenue account. You are to prepare…
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Listed below are selected events transactions relating to Kingbird, Inc. for the current year ending December 31. Kingbird manufactures laptop computers for sale in its own stores and for sale by other retailers. On December 1, Kingbird accepted an order from a new customer, Coronado Computers. Coronado has a questionable credit history, so Kingbird requires a $12,000 deposit from Coronado in order to begin production on its order. 1. During December, cash sales at Kingbird's retail locations totaled $5,029,000, which includes the 7% sales tax Kingbird must remit to the state by the fifteenth day of the following month. 2. During the year, Kingbird was sued by a competitor for a patent violation. The competitor is claiming that Kingbird's liability is $3,000,000. Kingbird's attorneys have advised it that it is probable that the court will find for the company's competitor. The attorneys estimate that the liability under the suit could be as little as $120,000 or as much as $600,000.…
Can I ask normal balance part for accounts payable, which one I should choose? credit or debit? why
MULTIPLE CHOICE
A credit memorandum results in a(n) ___ in a customers accounts receivable file. A. memo B. decrease C. Transer D. Increase
No. Account Titles and Explanation 1. 2. 3. Debit Credit ▬▬▬▬▬
Excess of Debit side over Credit side is called? Select one: a. All of the above b. Debit Balance c. Liability Accounts d. Credit Balance
For each of the unrelated situations described below, prepare the entries required to record the transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) 1. On August 1, 2023, Sarasota Corporation called its 11% convertible bonds for conversion. The $4,000,000 par value bonds were converted into 160,000 no par common shares. On August 1, there was $351,000 of unamortized premium applicable to the bonds. At the time of issuance, Contributed Surplus-Conversion Rights was credited for $142,000, which represented the equity portion of the convertible bonds, and the market value of the common shares was $21 per share. The company records the conversion using the book value method. Ignore all interest payments. 2. Marigold Inc. issues 11% convertible bonds, par $1,000,000, at 97. The investment…
Wildhorse Equipment Company, organized in 2025, has these transactions related to intangible assets in that year: Jan. 2 Purchased a patent (5-year life) $316,800. Apr. 1 Trademark purchased (indefinite life) $351,000. July 1 Acquired a 9-year franchise; expiration date July 1, 2034, $702,000. Sept. 1 Research and development costs $180,400. (a) Prepare the necessary entries to record these intangibles. All costs incurred were for cash. (Credit account titles are automaticall Indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O the amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries.) Date Account Titles and Explanation Debit Credit
No. (a) 1. 2. (b) 1. 2. < Account Titles and Explanation Debit ///////// Credit ‒‒‒‒‒‒‒‒
Identify inconsistencies or anomalies that require risk mitigation.
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