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67) Accounts Payable indicates amounts owed.
68) Accounts Payable indicates monies owed to us by our clients or customers.
69) Expenses paid in advance are recorded as Assets.
70) Accounts Payable is an asset account that is increased on the debit side.
71) The Accounts Receivable account is increased by a credit.
72) Why is Revenue increased on the Credit side? (Explain as it pertains to the expanded accounting
equation and its relationship to Owner’s Equity.)
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73) Selected accounts from the ledger of Thomas Company appear below. For each account, indicate the
following:
a. In the first column at right, indicate the type of each account using the following abbreviations:
Asset – A Revenue – R None of the above – N Liability – L Expense – E
b. In the second column, indicate the normal balance of the account by inserting a Dr. or Cr.
Account Type of Account Normal Balance
1. Office Supplies ______ ______
2. Accounts Receivable ______ ______
3. Fees Earned ______ ______
4. Thomas, Withdrawals ______ ______
5. Accounts Payable ______ ______
6. Salaries Expense ______ ______
7. Thomas, Capital ______ ______
8. Accounts Receivable ______ ______
9. Equipment ______ ______
10. Telephone Expense ______ ______
Answer:
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74) Identify the normal balance for each of the following accounts by placing a Dr. (debit) or a Cr. (credit)
in the space provided.
________ 1. Truck
________ 2. B. James, Withdrawals
________ 3. B. James, Capital
________ 4. Accounting Fees Earned
________ 5. Cash
________ 6. Accounts Receivable
________ 7. Accounts Payable
________ 8. Rent Expense
________ 9. Office Equipment
________ 10. Supplies
Answer:
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75) Identify whether a debit or credit would be correct for each of the following account changes. Use a
Dr. (debit) or Cr. (credit) in the space provided.
________ 1. Increase Truck
________ 2. Increase Accounts Receivable
________ 3. Increase Accounts Payable
________ 4. Increase Salaries Expense
________ 5. Increase Service Fees Earned
________ 6. Decrease Cash
________ 7. Increase S. McCrae, Capital
________ 8. Increase S. McCrae, Withdrawals
________ 9. Increase Rent Expense
________ 10. Increase Equipment
Answer:
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76) Below is a chart of accounts. Following is a series of transactions. Indicate for each transaction the
accounts that should be debited and credited by inserting the proper account number in the space
provided.
111 Cash 312 S. Anderson, Withdrawals
112 Accounts Receivable 411 Service Fees Earned
121 Office Equipment 511 Salaries Expense
211 Accounts Payable 512 Rent Expense
311 S. Anderson, Capital 513 Supplies Expense
Debit Credit Transaction
________ ________ 1. Purchased office equipment with cash.
________ ________ 2. Paid salaries for the week.
________ ________ 3. Invested additional cash in the business.
________ ________ 4. Received cash on account.
________ ________ 5. Billed a client on account for services performed.
________ ________ 6. Paid accounts payable.
________ ________ 7. Collected accounts receivable.
________ ________ 8. Withdrew cash for personal use.
________ ________ 9. Paid Supplies expense.
________ ________ 10. Paid rent expense for the month.
Answer:
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77) A chart of accounts is below. Following is a series of transactions. Indicate for each transaction the
accounts that should be debited and credited by inserting the proper account number in the space
provided.
111 Cash 312 G. Baxter, Withdrawals
112 Accounts Receivable 411 Delivery Fees Earned
121 Delivery Equipment 511 Salaries Expense
211 Accounts Payable 512 Rent Expense
311 G. Baxter, Capital 513 Utilities Expense
514 Gas Expense
Debit Credit Transaction
________ ________ 1. Invested cash in the business.
________ ________ 2. Received cash for delivery services performed.
________ ________ 3. Billed a customer for services performed.
________ ________ 4. Paid accounts payable.
________ ________ 5. Collected accounts receivable.
________ ________ 6. Withdrew cash for personal use.
________ ________ 7. Paid advertising expense.
________ ________ 8. Paid rent expense for the month.
________ ________ 9. Purchased delivery equipment on account.
________ ________ 10. Paid salaries for the week.
78) The following transactions occurred during June for Center City Cycle Shop. Record the transactions
below in the T accounts. Place the letter of the transaction next to the entry. Foot and calculate the ending
balances of the T accounts where appropriate.
a. invested $6500 in the bike service from his personal savings account.
b. Bought office equipment for cash, $900.
c. Performed bike service for a customer on account, $1,000.
d. Company cell phone bill received, but not paid, $80.
e. Collected $500 from customer in transaction c.
f. withdrew $300 for personal use.
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79)
Column 1 Column 2 Column 3
Postage Expense
80)
Column 1 Column 2 Column 3
Equipment
Answer:
81)
Column 1 Column 2 Column 3
Truck
Answer:
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82)
Column 1 Column 2 Column 3
Cleaning Expense
Answer:
83)
Column 1 Column 2 Column 3
Cleaning Fees Earned
Answer:
84)
Column 1 Column 2 Column 3
Salaries Payable
Answer:
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85)
Column 1 Column 2 Column 3
Service Fees Earned
86)
Column 1 Column 2 Column 3
Tree Care Fees Earned
Answer:
87)
Column 1 Column 2 Column 3
Supplies
Answer:
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2.3 Learning Objective 2-3
1) Which of the following is a financial statement?
A) Balance Sheet
B) Income Statement
C) Statement of Owner’s Equity
D) All of the above
2) A list of all the accounts from the ledger with their ending balances is called a:
A) normal balance.
B) trial balance.
C) chart of accounts.
D) bank statement.
3) Which of the following is prepared first?
A) Balance Sheet
B) Income Statement
C) Statement of Owner’s Equity
D) Trial Balance
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4) Given the following list of accounts with normal balances, what are the trial balance totals of the debits
and credits?
Cash $1,100
Accounts Receivable 800
Capital 2,000
Accounts Payable 900
Service Fees Earned 1,000
Rent Expense 2,000
A) $3,900 debit, $3,900 credit
B) $4,800 debit, $4,800 credit
C) $1,900 debit, $1,900 credit
D) $1,100 debit, $1,100 credit
5) Given the following list of accounts with normal balances, what are the trial balance totals of the debits
and credits?
Cash $1,000
Equipment 900
Accounts Payable 350
Capital 900
Service Fees Earned 1,000
Salaries Expense 350
A) $3,250 debit, $3,250 credit
B) $1,900 debit, $1,900 credit
C) $4,500 debit, $4,500 credit
D) $2,250 debit, $2,250 credit
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6) Which type of account would NOT be reported on the income statement?
A) Revenue
B) Expenses
C) Liabilities
D) None of the above answers are correct.
7) Prepaid expense would appear on which financial statement?
A) Balance Sheet
B) Income Statement
C) Owner’s Equity Statement
D) None of the above answers are correct.
8) A multi-step income statement:
A) shows debits.
B) shows credits.
C) shows debt owed.
D) shows subtotal amounts.
9) The beginning balance in the Capital account would appear on which financial statement?
A) Statement of Owner’s Equity
B) Balance Sheet
C) Income Statement
D) All of the above are correct.
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10) The income statement contains:
A) Liabilities.
B) Revenues.
C) Expenses.
D) Both B and C are correct.
11) On which financial statement would you find the ending balance in the Capital account?
A) Income Statement
B) Balance Sheet
C) Statement of Owner’s Equity
D) Both B and C are correct.
12) Which of the following is prepared last?
A) Balance Sheet
B) Income Statement
C) Statement of Owner’s Equity
D) Trial Balance
13) Net income or net loss for a period is calculated by the following formula:
A) total liabilities – total revenue.
B) total revenues + total expenses – total withdrawals – assets.
C) total revenues – total expenses.
D) total revenues – total expenses + capital.
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14) Which type of account would NOT be reported on the balance sheet?
A) Expense
B) Cash
C) Accounts Payable
D) Equipment
15) What is X-cel Company’s net income or net loss if it had Revenue of $2,200, Salary Expense of $700,
Utility Expense of $350, and Withdrawals of $3,000 during October?
A) $1,850 net income
B) $1,150 net loss
C) $1,150 net income
D) $1,850 net loss
16) The income statement is a financial statement.
17) The financial statements contain debit and credit columns.
18) Withdrawals and expenses are reported on the income statement.
19) Accounts Payable appears on the income statement.
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20) Wages Expense appears on the balance sheet.
21) Determine the ending owner’s equity of a business having a beginning owner’s equity of $8,500,
additional investments of $600, withdrawals of $1,000, and net income of $1,200.
$ ________
22) Determine the beginning owner’s equity of a business having an ending owner’s equity of $3,500,
additional investments of $600, withdrawals of $500, and net loss of $750.
$ ________
23) Determine the beginning owner’s equity of a business having beginning assets of $9,000 and ending
liabilities of $5,000. During the year the liabilities decreased by $1,000.
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24) Number the following types of accounts (1–6) as they would appear on the Trial Balance.
________ Assets
________ Capital
________ Revenue
________ Liabilities
________ Withdrawals
________ Expenses
25) The following is a list of accounts and their balances for Myra’s Company for the month ended May
31, 20xx. Prepare a trial balance in good form.
Cash $1,710 Myra, Withdrawals $980
Accounts Payable 1,000 Accounts Receivable 1,200
Office Equipment 1,760 Service Fees Earned 1,835
Myra, Capital 3,465 Rent Expense 650
Answer:
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26) The following is a list of accounts and their balances for Benson Company for the month ended June
30, 20xx. Prepare a trial balance in good form.
Cash $1,170 Benson, Withdrawals $ 500
Accounts Payable 1,270 Accounts Receivable 1,100
Office Equipment 1,600 Service Fees Earned 2,230
Benson, Capital 1,500 Salaries Expense 630
Answer: