2.3-25 In accounting, the process of posting involves transferring data from the:
A) ledger to the journal.
B) journal to the ledger.
C) source documents to the ledger.
D) source documents to the journal.
2.3-26 A grouping of all the T-accounts with their balances is called the:
A) accounting equation.
B) trial balance.
C) journal.
D) ledger.
2.3-27 Double-entry accounting means that each transaction:
A) increases at least one account and decreases at least one account.
B) debits at least one account and credits at least one account.
C) is recorded in both the journal and in the ledger.
D) affects both an income statement account and a balance sheet account.
2.3-28 Which element(s) of an accounting system provide(s) information about the balance in each account?
A) Source documents
B) Journals
C) Ledgers
D) Accrual record
2.3-29 The normal balance of an account:
A) is always a debit.
B) is always a credit.
C) is the side that increases the account balance.
D) can be determined from the journal.
2.3-30 Credits to revenue accounts ultimately result in a(n):
A) decrease in shareholders’ equity and assets.
B) increase in shareholders’ equity and assets.
C) decrease in assets and liabilities.
D) increase in liabilities and assets.
2.3-31 The entry to record the purchase of supplies on account would include a debit to:
A) Supplies.
B) Accounts Payable.
C) Supplies Expense.
D) Retained Earnings.
2.3-32 The entry to record the payment of salaries to employees would include a:
A) credit to Salary Expense.
B) debit to Accounts Payable.
C) debit to Salary Expense.
D) debit to Accounts Receivable.
2.3-33 The journal entry to record performing a service on account would include a debit to:
A) Cash.
B) Service Revenue Expense.
C) Accounts Receivable.
D) Retained Earnings.
2.3-34 The payment for monthly rent of an office building would include a:
A) debit to Cash.
B) debit to Prepaid Rent.
C) debit to Rent Expense.
D) credit to Revenue.
2.3-35 The purchase of office furniture for cash would include a debit to:
A) Accounts Payable.
B) Office Furniture.
C) Office Furniture Expense.
D) Cash.
2.3-36 An owner makes an investment of cash into the business. This transaction would include a:
A) debit to Share Capital and a credit to Share Capital.
B) debit to Cash and a credit to Share Capital.
C) debit to Retained Earnings and a credit to Cash.
D) debit to Share Capital and a credit to Retained Earnings.
2.3-37 A shareholder’s investment of land and a building into the business would include a debit to:
A) Land and Building and a credit to Share Capital.
B) Land and a credit to Building.
C) Share Capital and a credit to Building.
D) Building and a credit to Retained Earnings.
2.3-38 The purchase of an automobile involving a cash down payment and a promise to pay the balance in the
future would include a debit to:
A) Note Payable and a credit to Cash.
B) Cash and a credit to Automobile.
C) Cash and a debit to Note Payable.
D) none of the above.
2.3-39 The purchase of office computers for cash would include a debit to:
A) Cash and a credit to Office Equipment.
B) Office Equipment and a credit to Accounts Payable.
C) Accounts Receivable and credit to Office Equipment.
D) Office Equipment and a credit to Cash.
2.3-40 Paying a previous dividend due to the company’s shareholders would include a debit to:
A) Cash and a credit to Dividends.
B) Dividends Payable and a credit to Cash.
C) Retained Earnings and a credit to Cash.
D) Accounts Payable and a credit to Retained Earnings.
2.3-41 Receiving a check from a customer on account would include a credit to:
A) Cash.
B) Accounts Payable.
C) Sales Revenue.
D) Accounts Receivable.
2.3-42 Making a cash payment to settle a debt would include a:
A) debit to Cash.
B) credit to Cash.
C) credit to Accounts Payable.
D) debit to Accounts Receivable.
2.3-43
The entry to record the purchase of office supplies on account for $400 would be:
A) Office Supplies
400
Cash
400
B) Accounts Payable
400
Cash
400
C) Office Supplies
400
Accounts Payable
400
D) Cash
400
Office Supplies Expense
400
2.3-44 The entry to record an owner investment of $600 into the business would be:
A) Dividends
600
Cash
600
B) Cash
600
Dividends
600
C) Cash
600
Service revenue
600
D) Cash
600
Share Capital
600
2.3-45 The entry to record the payment of $925 to a supplier for office supplies previously purchased on account
would be:
A) Cash
925
Accounts Payable
925
B) Accounts Payable
925
Cash
925
C) Office Supplies Expense
925
Cash
925
D) Office Supplies Expense
925
Accounts Payable
925
2.3-46
The entry to record the payment of the monthly salaries of $1,000 would be:
A) Cash
1,000
Salaries Expense
1,000
B) Salaries Expense
1,000
Accounts Payable
1,000
C) Salaries Expense
1,000
Cash
1,000
D) Accounts Payable
1,000
Cash
1,000
2.3-47 The entry to record $1,000 received from a customer for services previously rendered would be:
A) Cash
1,000
Accounts Receivable
1,000
B) Cash
1,000
Service Revenue
1,000
C) Service Revenue
1,000
Accounts Receivable
1,000
D) Dividends
1,000
Cash
1,000
2.3-48 The normal balance of an expense account is a __________ because expenses decrease __________.
A) debit, assets
B) debit, expenses
C) debit, shareholders’ equity
D) credit, shareholders’ equity
2.3-49 The normal balance of the Dividends account is a ___________ because it decreases __________.
A) debit, assets
B) debit, expenses
C) debit, shareholders’ equity
D) credit, shareholders’ equity
2.3-50 The normal balance of a revenue account is a __________ because revenues increase __________.
A) debit, assets
B) debit, expenses
C) debit, shareholders’ equity
D) credit, shareholders’ equity
2.3-51 The classification and normal balance of the cash account is:
A) an expense account with a debit balance.
B) an expense account with a credit balance.
C) an asset account with a credit balance.
D) an asset account with a debit balance.
2.3-52 Joe Donaldson deposited $80,000 in a bank account, purchased a company for $60,000 cash (Building
$40,000 and Inventory $20,000), performed services for clients for $10,000 cash, purchased supplies for
$5,000 cash, and paid utilities of $2,000 cash. The journal entry to record the purchase of the company
includes a:
A) credit to Building for $40,000.
B) debit to Share Capital for $60,000.
C) debit to Inventory for $20,000.
D) credit to Cash for $40,000.
2.3-53 George P. Smythe Co. purchased equipment from Chester Grahame Co for $200,000, paying 10% as a
down payment and financing the remainder. The proper journal entry for this event is:
A) Equipment
200,000
Cash
200,000
B) Equipment
200,000
Cash
20,000
Notes Receivable
180,000
C) Equipment
1,000
Cash
20,000
Notes Payable
180,000
D) Cash
20,000
Notes Payable
180,000
Equipment
200,000
2.4-1 A trial balance is a list of all accounts and their balances for a period of time.