14) When a business records an accrued utility liability, the Utilities Expense account is credited.
15) When a business records the earning of service revenue, the Service Revenue account is credited.
16) Transactions are first record in a ________.
A) chart of accounts
B) trial balance
C) journal
D) ledger
17) Journalizing a transaction involves ________.
A) calculating the balance in an account using journal entries
B) posting the account balances in the chart of accounts
C) preparing a summary of account balances
D) recording the data only in the journal
18) Posting a transaction means ________.
A) calculating the balance in an account
B) transferring data from the journal to the ledger
C) preparing a summary of account balances
D) finding the account number in the chart of accounts
19) After initially recording a transaction, the data is then transferred to the ________.
A) chart of accounts
B) ledger
C) trial balance
D) journal
20) The accounting process of transferring data from the journal to the ledger is called ________.
A) journalizing
B) posting
C) compounding
D) sourcing
21) The first step in the journalizing and posting process is to ________.
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
22) Which of the following is the order of steps to journalize an entry?
A) Identify the accounts and the account type → Decide whether each account increases or decreases,
then apply the rules of debits and credits → Record the transaction
B) Identify the accounts and the account type → Record the transaction → Decide whether each account
increases or decreases, then apply the rules of debits and credits
C) Record the transaction → Identify the accounts and the account type → Decide whether each account
increases or decreases, then apply the rules of debits and credits
D) Decide whether each account increases or decreases, then apply the rules of debits and credits →
Identify the accounts and the account type → Record the transaction
23) Which of the following is the final step in the journalizing and posting process?
A) Posting the accounts to the ledger
B) Identifying each account affected and its type
C) Determining whether the accounting equation is in balance
D) Determining whether each account has increased or decreased
24) Which of the following sequences is the normal sequence of flow of accounting data?
A) Ledger → Journal → Source document
B) Journal → Source document → Ledger
C) Source document → Journal → Ledger
D) Source document → Ledger → Journal
25) A business renders services to a client and issues a sales invoice. The amount will be collected from
the customer at a later time. Which of the following is true at the time the invoice is issued?
A) Equity will decrease.
B) Total liabilities will increase.
C) Total assets will decrease.
D) Net income will increase.
26) Wilson Furniture Company received cash of $40,000 and issued common stock. Which of the
following accounts will be debited?
A) Accounts Receivable
B) Cash
C) Common Stock
D) Accounts Payable
27) Ranger Pool Company received cash of $40,000 and issued common stock. Which of the following
accounts will be credited?
A) Accounts Receivable
B) Cash
C) Common Stock
D) Accounts Payable
28) A business purchases equipment for $8,000 cash. Which of the following accounts is debited?
A) Cash
B) Accounts Payable
C) Common Stock
D) Equipment
29) A business purchases equipment for $8,000 cash. Which of the following accounts is credited?
A) Cash
B) Accounts Payable
C) Common Stock
D) Equipment
30) A business purchases equipment in exchange for a note payable. This transaction results in ________.
A) no journal entry because no cash has been paid
B) a debit to Notes Payable and a credit to Equipment
C) an increase in liabilities
D) a debit to Equipment and a credit to Accounts Payable
31) A business makes a cash payment of $12,000 to a supplier for supplies purchased two weeks earlier.
Which of the following accounts is debited?
A) Cash
B) Accounts Payable
C) Supplies
D) Accounts Receivable
32) A business makes a cash payment of $12,000 to a creditor. Which of the following accounts is
credited?
A) Cash
B) Accounts Payable
C) Bank
D) Accounts Receivable
33) A business performs services for a customer for $26,000 on account. Which of the following accounts
is debited?
A) Cash
B) Accounts Receivable
C) Service Revenue
D) Accounts Payable
34) A business performs services for a customer for $26,000 on account. Which of the following accounts
is credited?
A) Cash
B) Accounts Receivable
C) Service Revenue
D) Accounts Payable
35) A business performs services for $26,000 and collects cash from the customer. Which of the following
accounts will be debited?
A) Cash
B) Accounts Receivable
C) Service Revenue
D) Accounts Payable
36) A business prepays four months’ office rent. Which of the following accounts is debited?
A) Rent Expense
B) Cash
C) Prepaid Rent
D) Unearned Rent
37) A business receives $40,000 for services that it will perform over the next four months. Which of the
following accounts is credited?
A) Cash
B) Accounts Payable
C) Service Revenue
D) Unearned Revenue
38) Adams, Inc. recorded the following journal entry on March 2, 2018.
Cash
9,000
Unearned Revenue
9,000
From the journal entry above, identify the transaction on March 2, 2018.
A) Adams purchased goods worth $9,000 and signed a one-year note for the same amount.
B) Adams sold goods for $9,000 cash.
C) Adams received $9,000 for services to be performed in a later period.
D) Adams paid $9,000 for services to be received at a later date.
39) A business buys $300 of office supplies on account. Which of the following accounts is debited?
A) Cash
B) Accounts Payable
C) Office Supplies
D) Accounts Receivable
40) A business pays $800 cash for office supplies. Which of the following accounts is credited?
A) Cash
B) Accounts Payable
C) Office Supplies
D) Office Supplies Expense
41) A business purchases $1,000 of office supplies on account. Which of the following accounts is debited?
A) Cash
B) Accounts Payable
C) Office Supplies
D) Prepaid Asset
42) A business purchases $500 of office supplies on account. What is the effect on the accounting
equation?
A) Office Supplies increase and Cash decreases.
B) Office Supplies increase and Accounts Payable increase.
C) Office Supplies increase and Accounts Payable decrease.
D) Total assets increase and total liabilities decrease.
43) A business makes a cash payment to a supplier for office supplies that were purchased earlier on
account. Which of the following accounts is debited?
A) Cash
B) Accounts Payable
C) Office Supplies
D) Office Supplies Expense
44) A business makes a cash payment to a supplier on account for office supplies that were purchased
earlier. Which of the following accounts is credited?
A) Cash
B) Accounts Payable
C) Office Supplies
D) Office Supplies Expense
45) A business collects cash from a customer for services that were performed one month earlier. Which
of the following accounts is debited?
A) Cash
B) Accounts Receivable
C) Service Revenue
D) Accounts Payable