35) Consider the following accounts and identify each as an asset (A), liability (L), or equity (E).
Common Stock
Accounts Receivable
Dividends
Service Revenue
Prepaid Rent
Common Stock
E
Accounts Receivable
A
Dividends
E
Service Revenue
E
Prepaid Rent
A
36) Consider the following accounts and identify each as an asset (A), liability (L), or equity (E).
Dividends
Unearned Revenue
Office Supplies
Rent Expense
Retained Earnings
Dividends
E
Unearned Revenue
L
Office Supplies
A
Rent Expense
E
Retained Earnings
E
37) Consider the following accounts and identify each as an asset (A), liability (L), or equity (E).
Retained Earnings
Unearned Revenue
Building
Interest Revenue
Prepaid Advertising
Retained Earnings
E
Unearned Revenue
L
Building
A
Interest Revenue
E
Prepaid Advertising
A
38) A chart of accounts is a detailed record of the changes in a particular asset, liability, or equity account
during a specified period.
39) A chart of accounts is a list of all of a company’s accounts with their account numbers.
40) The account names in the chart of accounts are standardized and thus are the same for all businesses.
41) Which of the following is provided in a typical chart of accounts?
A) Account balance
B) Account number
C) Dates of transactions
D) Transaction amounts
42) A listing of all accounts in numerical order is called a(n) ________.
A) Ledger
B) Journal
C) Income statement
D) Chart of accounts
43) Companies use a ledger to show all of the increases and decreases in each account along with their
balances.
44) A chart of accounts provides more detail than a ledger.
45) Which of the following is the record holding all the accounts, the changes in those accounts, and their
balances?
A) Source document
B) Journal
C) Ledger
D) Trial balance
46) Regarding the ledger, which of the following statements is incorrect?
A) Both the chart of accounts and the ledger list the account names and numbers of the business.
B) Companies use the ledger to fulfill the task of showing all of the increases and decreases in each
account.
C) Both the chart of accounts and the ledger provide the balance of each account at a specific point in
time.
D) The ledger provides more detail than the chart of accounts.
47) Both the chart of accounts and the ledger ________.
A) provide the balance of each account at a specific point in time
B) list the account names and numbers of the business
C) fulfill the task of showing all of the increases and decreases in each account
D) All of the statements are correct.
1) The system of accounting in which every transaction affects at least two accounts is called the double–
entry system.
2) The accounting analysis system is used to record the dual effects of each transaction.
3) Regarding the double-entry system, which of the following statements is incorrect?
A) A transaction would be incomplete if only one side were recorded.
B) Because of technology, the use of the double-entry system of accounting is optional.
C) The double-entry system is a system of accounting in which every transaction affects at least two
accounts.
D) If office supplies are purchased on account, the account Office Supplies increases and the account
Accounts Payable increases.
4) Debit refers to the right side of the T-account, and credit refers to the left side.
5) A T-account is a summary device with credits posted on the left side of the vertical line.
6) Debit is abbreviated as DE and Credit is abbreviated as CR.
7) The left side of the T-account for Accounts Receivable is the debit side and the left side of the T-account
for Accounts Payable is the credit side.
8) The T-account is a summary device that is shaped like a capital T with debits posted on the right side
of the vertical line and credits posted on the left side of the vertical line.
9) The T-account is a summary device that is shaped like a capital T with debits posted on the left side of
the vertical line and credits posted on the right side of the vertical line.
10) Regarding T-accounts, which of the following statements is correct?
A) A T-account is a more detailed form of an account in the journal.
B) The right side of a T-account is a debit for asset accounts and a credit for equity accounts.
C) Debits are posted on the right side of the vertical line.
D) A T-account is a summary device with credits posted on the right side of the vertical line.
11) A shortened form of the ledger is called a ________.
A) working account
B) summary account
C) chart of accounts
D) T-account
12) An asset account is increased by a debit.
13) A liability account is increased by a debit.
14) A debit always means a decrease, and a credit always means an increase.
15) Which of the following accounts decreases with a debit?
A) Accounts Receivable
B) Notes Payable
C) Cash
D) Rent Expense
16) “All debits are increases and all credits are decreases.” Is this a correct statement? Explain your
answer.
17) The Common Stock account is increased by a debit.
18) The Dividends account is increased by a debit.
19) All asset accounts and equity accounts increase with a debit.
20) The balances in the liability and revenue accounts are increased with a credit.
21) Which of the following accounts increases with a credit?
A) Dividends
B) Common Stock
C) Accounts Receivable
D) Prepaid Expense
22) Which of the following accounts decreases with a credit?
A) Cash
B) Common Stock
C) Accounts Payable
D) Unearned Revenue
23) Which of the following accounts increases with a debit?
A) Prepaid Rent
B) Interest Payable
C) Accounts Payable
D) Common Stock
24) Which one of the following account groups will decrease with a debit?
A) assets and expenses
B) revenues and expenses
C) liabilities and revenues
D) assets and liabilities
25) Which of the following statements is true of expenses?
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.