2.2-4 The left hand side of a T account is the debit side and the right hand side is the credit side.
2.2-5 Accounts are records of increases and decreases in individual financial statement items.
2.2-6 An account with a normal credit balance is most often a liability or shareholders’ equity account.
2.2-7 Liabilities and revenues are decreased by credits.
2.2-8 Assets, owners’ equity and dividends are all increased by debits.
2.2-9 Revenues and expenses are specialized shareholders’ equity accounts, all having debit balances.
2.2-10 Dividends and expenses are specialized shareholders’ equity accounts that are increased by debits.
2.2-11 Every business transaction involves both debits and credits.
2.2-12 All business transactions involve an increase in at least one account and a decrease in at least one other
account.
2.2-13 The left side of a T-account is always the:
A) increase side.
B) decrease side.
C) debit side.
D) credit side.
2.2-14 Which of the following statements regarding T accounts is FALSE?
A) The account title appears at the top of the T account.
B) The right side is the debit side.
C) The right side is the credit side.
D) T accounts are a useful tool in accounting.
2.2-15 The credit side of an account:
A) is the left side of the account.
B) depends on whether the account is an asset or liability.
C) is the right side of the account.
D) can change as needed.
2.2-16 Which of the following statements regarding accounts is TRUE?
A) An asset is increased by a debit and decreased by a credit.
B) Dividends are decreased by debits and increased by credits.
C) A liability is increased by a debit and decreased by a credit.
D) Revenue is increased by a debit; an expense is increased by a credit.
2.2-17 Transactions affecting shareholders’ equity include:
A) share capital, revenues, expenses and collection of an account receivable.
B) retained earnings, revenues, expenses, and liabilities.
C) share capital, revenues, expenses, dividends and retained earnings.
D) share capital, retained earnings, revenues and assets.
2.2-18 Increases in shareholders’ equity that result from delivering goods or services to customers are:
A) assets.
B) revenues.
C) expenses.
D) liabilities.
2.2-19 Decreases in shareholders’ equity that are due to the cost of operating the business are:
A) assets.
B) revenues.
C) expenses.
D) liabilities.
2.2-20 Which statement is NOT true?
A) A credit increases a liability account.
B) A debit increases an asset account
C) Revenues are increased by a debit.
D) Expenses are increased by a debit.
2.2-21 Which accounts are increased by debits?
A) Assets and owners’ equity
B) Expenses and owners’ equity
C) Assets, expenses and dividends
D) Assets, expenses and owners’ equity
2.2-22 An account is increased by a debit and has a normal balance of a debit. This account is:
A) an expense account.
B) a liability account.
C) an asset account.
D) both an expense account and an asset account.
2.2-23 A business purchases a truck by signing a note payable to the seller. This transaction would include a:
A) credit to Truck.
B) debit to Note Payable.
C) credit to Note Payable.
D) debit to Prepaid Maintenance.
2.2-24 The accounting transaction to record a loan would include a credit to:
A) Cash.
B) Notes Payable.
C) Utilities Expense.
D) Accounts Receivable.
2.3-1 Debits are always listed before credits in a journal entry.
2.3-2 The cash account is always debited.
2.3-3 Entering a transaction in the journal automatically gets the data into the ledger.
2.3-4 The balance of an account is the difference between the account’s total debits and its total credits.
2.3-5 In a journal entry, the sum of the debits must always equal the sum of the credits.
2.3-6 The chart of accounts would be the same for General Motors and Wal-Mart.
2.3-7
Journal entries can have more than two accounts as long as the total debits equal the total credits.
2.3-8 If an account’s total debits exceed its total credits, the account would have a credit balance.
2.3-9 The balance of an account can be determined by adding all of the debits, adding all of the credits, and
then subtracting the two amounts.
2.3-10 Accounts in the ledger are maintained in alphabetical order.
2.3-11 A journal shows a chronological listing of the accounting activities of a business.
2.3-12
Posting accounting transactions avoids the necessity of journalizing transactions.
2.3-13 If a company wanted to know how much cash it had available, it would look in the journal.
2.3-14 Accounting transactions are initially recorded in the:
A) T-account.
B) ledger.
C) journal.
D) financial statements.
2.3-15 The process of recording a transaction in the journal is called:
A) posting.
B) summarizing.
C) journalizing.
D) preparing the financial statements.
2.3-16 The process of copying the information from the journal to the ledger is called:
A) posting.
B) summarizing.
C) journalizing.
D) preparing the financial statements.
2.3-17 A listing of all of the accounts that make up the ledger is called the:
A) T-account.
B) ledger.
C) journal.
D) chart of accounts.
2.3-18 A chronological record (or history) of an entity’s transactions is called a:
A) T-account.
B) ledger.
C) journal.
D) financial statements.
2.3-19 Which statement about the journal is NOT true?
A) The journal lists transactions in chronological order.
B) The journal entry lists debits before credits.
C) The journal entry shows a complete transaction in one place.
D) The journal entry shows the balance in each account.
2.3-20 Accounts are listed in the ledger:
A) alphabetically.
B) chronologically.
C) in random order.
D) in the same order as they appear on the financial statements.
2.3-21 An account will have a debit balance if:
A) the amount of the credits exceeds the amount of the debits.
B) the amount of the debits exceeds the amount of the credits.
C) the account has more debit entries than credit entries.
D) it is a liability account.
2.3-22 What is the first step in the journalizing process?
A) Record the transaction in the journal.
B) Post the transaction to the ledger.
C) Determine whether each account is increased or decreased by the transaction.
D) Specify each account affected by the transaction and classify each account by type.
2.3-23 Which of the following items would NOT be included in the journal entry for a transaction?
A) The source documents initiating the transaction
B) The date the accounting transaction was entered
C) The titles of the accounts debited
D) The dollar amount credited
2.3-24 The proper order for the accounting process is:
A) posting, transaction occurs, journalizing.
B) transaction occurs, posting, journalizing.
C) transaction occurs, transaction analyzed, journalizing, and posting.
D) transaction occurs, posting, transaction analyzed, journalizing.
