Name:
Class:
Date:
chapter 2
Indicate whether the statement is true or false.
1. Utilities Expense is increased with a debit.
a.
True
b.
False
2. Each liability account has a normal debit balance.
a.
True
b.
False
3. When cash is paid for supplies, the Supplies account is increased by a credit.
a.
True
b.
False
4. To summarize withdrawal information separately from the other records, owner withdrawal transactions are recorded in
the owner’s capital account.
a.
True
b.
False
5. A drawing account is increased by debits and decreased by credits.
a.
True
b.
False
6. Each transaction changes the balances in at least two accounts.
a.
True
b.
False
7. The balance of an account increases on the same side as the normal balance side.
a.
True
b.
False
8. An amount recorded on the right side of a T account is a debit.
a.
True
b.
False
9. Accounts Payable accounts are increased with a debit.
a.
True
b.
False
10. An accounting device used to analyze transactions is a T account.
a.
True
b.
False
11. The normal balance side of an Accounts Receivable account is a debit.
a.
True
b.
False
Name:
Class:
Date:
chapter 2
12. Cash is increased with a debit.
a.
True
b.
False
13. Prepaid Insurance is decreased with a credit.
a.
True
b.
False
14. Increases in expense accounts are recorded as debits because they decrease the owner’s capital account.
a.
True
b.
False
15. Common accounting practice is to record withdrawals as debits directly in the owner’s capital account.
a.
True
b.
False
16. A list of accounts used by a business is a chart of accounts.
a.
True
b.
False
17. Each asset account has a normal credit balance.
a.
True
b.
False
18. Decreases to liability accounts are recorded on the credit side.
a.
True
b.
False
19. The left side of an asset account is the credit side because asset accounts are on the left side of the accounting
equation.
a.
True
b.
False
20. Asset accounts decrease on the credit side.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
21. When an owner invests cash in a business, the owner’s capital account is
a.
increased by a debit.
b.
increased by a credit.
c.
decreased by a debit.
d.
decreased by a credit.
22. If an amount is recorded on the side of a T account opposite the normal balance side, the account balance is
a.
increased.
b.
decreased.
Name:
Class:
Date:
chapter 2
c.
unaffected.
d.
correct.
23. When $1,500 cash is received on account,
a.
Sales is increased with a credit and Cash is increased with a credit.
b.
Accounts Receivable is increased with a debit and Cash is increased with a credit.
c.
Accounts Receivable is decreased with a credit and Cash is increased with a debit.
d.
Accounts Receivable is decreased with a debit and Cash is increased with a debit.
24. The normal balance side of a liability account is the
a.
debit side.
b.
credit side.
c.
decrease side.
d.
left side.
25. When a business pays cash on account, a liability account is
a.
increased by a debit.
b.
increased by a credit.
c.
decreased by a debit.
d.
decreased by a credit.
26. Increases in a revenue account are shown on a T account’s
a.
debit side.
b.
left side.
c.
credit side.
d.
none of these.
27. The left side of a T account is the
a.
debit side.
b.
credit side.
c.
normal balance side.
d.
equity side.
28. The normal balance side of any revenue account is the
a.
debit side.
b.
credit side.
c.
left side.
d.
none of these.
29. When cash is received from sales, the change in the owner’s equity is usually recorded
a.
on the debit side.
b.
directly in the owner’s capital account.
c.
as interest revenue.
d.
in a separate revenue account.
Name:
Class:
Date:
chapter 2
Answer Key
Name:
Class:
Date:
chapter 2