Chapter 2: Analyzing Transactions
122.
Office supplies purchased by Janer’s Cleaning Service on account were returned. Which of the following
entries
for Janer’s Cleaning Service records this transaction?
a.
Cash, debit; Office Supplies, credit
b.
Office Supplies, debit; Accounts Receivable, credit
c.
Accounts Payable, debit; Office Supplies, credit
d.
Office Supplies, debit; Accounts Payable, credit
123.
Cash was paid by Janer’s Cleaning Service to creditors on account. Which of the following entries for Janer’s
Cleaning Service records this transaction?
a.
Cash, debit; Debbi Janer, Capital, credit
b.
Accounts Payable, debit; Cash, credit
c.
Accounts Receivable, debit; Cash, credit
d.
Accounts Payable, debit; Account Receivable, credit
124.
The process of initially recording a business transaction is called
a.
closing
b.
posting
c.
journalizing
d.
balancing
Chapter 2: Analyzing Transactions
125.
Which of the following entries records the acquisition of office supplies on account?
a.
Office Supplies, debit; Cash, credit
b.
Cash, debit; Office Supplies, credit
c.
Office Supplies, debit; Accounts Payable, credit
d.
Accounts Receivable, debit; Office Supplies, credit
126.
Which of the following entries records the payment of insurance for the current month?
a.
Cash, debit; Insurance Expense, credit
b.
Insurance Expense, debit; Cash, credit
c.
Insurance Expense, debit; Accounts Receivable, credit
d.
Prepaid Insurance, debit; Cash, credit
127.
Which of the following entries records the receipt of cash from clients on account?
a.
Accounts Payable, debit; Fees Earned, credit
b.
Accounts Receivable, debit; Fees Earned, credit
c.
Accounts Receivable, debit; Cash, credit
d.
Cash, debit; Accounts Receivable, credit
Chapter 2: Analyzing Transactions
128.
Which of the following entries records the collection of cash from cash customers?
a.
Fees Earned, debit; Cash, credit
b.
Fees Earned, debit; Accounts Receivable, credit
c.
Cash, debit; Fees Earned, credit
d.
Accounts Receivable, debit; Fees Earned, credit
129.
Which of the following entries records the receipt of cash for two months’ rent? The cash was received in advance
of providing the service.
a.
Prepaid Rent, debit; Rent Revenue, credit.
b.
Cash, debit; Unearned Rent, credit.
c.
Cash, debit; Prepaid Rent, credit.
d.
Cash, debit; Rent Expense credit.
130.
A client has a massage and asks the company bookkeeper to mail her the bill. The bookkeeper should make
which
entry to record the invoice?
a.
No entry until the cash is received
b.
Fees Earned, debit; Accounts Receivable, credit
c.
Cash, debit; Fees Earned, credit
d.
Accounts Receivable, debit; Fees Earned, credit
Chapter 2: Analyzing Transactions
131.
Which of the following abbreviations is correct?
a.
Debit “Dr”, Credit “Cd”
b.
Debit “Db”, Credit “Cr”
c.
Debit “Db”, Credit “Cd”
d.
Debit “Dr”, Credit “Cr”
132.
Which of the following is not a correct rule of debits and credits?
a.
Assets, expenses, and withdrawals are increased by debits.
b.
Assets are decreased by credits and have a normal debit balance.
c.
Liabilities, revenues, and owner’s equity are increased by credits.
d.
The normal balance for revenues and expenses is a credit.
Chapter 2: Analyzing Transactions
133.
Gently Laser Clinic purchased laser equipment for $8,500, paid $2,250 down, with the remainder to be
paid
later. The correct entry would be
a. Equipment
Cash
2,250
2,250
b. Cash
2,250
Accounts Payable
Equipment
6,250
8,500
c. Equipment Expense
8,500
Accounts Payable
Cash
2,250
6,250
d. Equipment
Accounts Payable
7,500
5,250
Cash
2,250
134.
The is where a transaction can first be found in the accounting records.
a.
chart of accounts
b.
income statement
c.
balance sheet
d.
journal
Chapter 2: Analyzing Transactions
135.
The process of recording a transaction in the journal is called
a.
ledgerizing
b.
journalizing
c.
posting
d.
summarizing
136.
Joshua Scott invests $40,000 into his new business. How would this transaction be entered in the journal in
good
form?
a.
Cash 40,000
Joshua Scott, Capital 40,000
Invested cash in business.
b.
Cash 40,000
Joshua Scott, Capital 40,000
Invested cash in business
c.
Joshua Scott, Capital 40,000
Cash 40,000
Invested cash in business
d.
Joshua Scott, Loan 40,000
Cash 40,000
Invested cash in business
Chapter 2: Analyzing Transactions
137.
May
23
Cash
22,000
Scott Clark, Capital
22,000
Invest cash in business.
The journal entry will
a.
increase Capital and decrease Cash
b.
increase Cash and decrease Capital
c.
increase Cash and increase Capital
d.
decrease Cash and decrease Capital
138.
May
24
Land
105,000
Cash
105,000
Purchased land for business.
What effects does this journal entry have on the accounts?
a.
increase Cash and increase Land
b.
increase Land and decrease Cash
c.
decrease Cash and decrease Land
d.
increase Cash and decrease Land
Chapter 2: Analyzing Transactions
139.
March
10
Accounts Payable
800
Cash
800
Paid creditors on account.
What effects does this journal entry have on the accounts?
a.
decrease Accounts Payable, increase Cash
b.
increase Cash, decrease Accounts Payable
c.
increase Accounts Payable, increase Cash
d.
decrease Accounts Payable, decrease Cash
140.
Which of the following accounts would be increased with a credit?
a.
Land; Accounts Payable; Drawing
b.
Accounts Payable; Unearned Revenue; Collins, Capital
c.
Collins, Capital; Accounts Receivable; Unearned Revenue
d.
Cash; Accounts Receivable; Collins, Capital
Chapter 2: Analyzing Transactions
141.
In accordance with the debit and credit rules, which of the following is true?
a.
Debits increase assets.
b.
Credits increase assets.
c.
Debits increase both assets and capital.
d.
Credits increase both assets and liabilities.
142.
All of the following accounts are increased with a debit except
a.
Unearned Revenues
b.
Land
c.
Accounts Receivable
d.
Cash
143.
Which of the following owner’s equity accounts follows the same debit and credit rules as liabilities?
a.
expense accounts only
b.
drawing accounts only
c.
revenue accounts only
d.
expense and drawing accounts
Chapter 2: Analyzing Transactions
144.
The payment for the monthly rent will require which of the following entries?
a.
debit Cash and debit Rent Expense
b.
credit Cash and credit Rent Expense
c.
debit Rent Expense and credit Cash
d.
credit Rent Expense and debit Cash
145.
Expenses follow the same debit and credit rules as
a.
revenues
b.
the drawing account
c.
the capital account
d.
liabilities
146.
Net income will result when
a.
revenues (credits) > expenses (debits)
b.
revenues (debits) > expenses (credits)
c.
expenses (credits) = revenues (debits)
d.
revenues (credits) = expenses (debits)
Chapter 2: Analyzing Transactions
147.
Which of the following will increase owner’s equity?
a.
Expenses > revenues.
b.
The owner draws money for personal use.
c.
Revenues > expenses.
d.
Cash is received from customers on account.
148.
Which of the following situations increase owner’s equity?
a.
Supplies are purchased on account.
b.
Services are provided on account.
c.
Cash is received from customers on account.
d.
Utility bill will be paid next month.
149.
Which of the following groups of accounts are increased with a debit?
a.
assets, liabilities, owner’s equity
b.
assets, drawing, expenses
c.
assets, revenues, expenses
d.
assets, liabilities, revenues
Chapter 2: Analyzing Transactions
150.
Which of the following groups of accounts increase with a credit?
a.
capital, revenues, expenses
b.
assets, capital, revenues
c.
liabilities, capital, revenues
d.
none of these
151.
Which of the following is true regarding normal balances of accounts?
a.
All accounts have a normal debit balance.
b.
The normal balance of all accounts will have either a positive or negative balance.
c.
Accounts that have a normal debit balance will only have debit entries, never credit entries.
d.
The normal balance is on the increase side of the account.
152.
Which of the following is not true with a double-entry accounting system?
a.
The accounting equation remains in balance.
b.
The sum of all debits is always equal to the sum of all credits in each journal entry.
c.
Each business transaction will have two debits.
d.
Every transaction affects at least two accounts.
Chapter 2: Analyzing Transactions
153.
March
6
Cash
2,500
Unearned Fees
2,500
????????????.
What is the best explanation for this journal entry?
a.
Received cash for services performed.
b.
Received cash for services to be performed in the future.
c.
Paid cash in advance for services to be performed.
d.
Performed services for which cash is owed.
154.
April
14
Equipment
15,000
Cash
5,000
Note Payable
10,000
????????????.
Which is the best explanation for this journal entry?
a.
Purchased equipment; paid cash of $5,000, with the remainder to be paid in the future.
b.
Purchased equipment; paid cash of $10,000, with the remainder to be received in the future.
c.
Purchased equipment with cash.
d.
Purchased equipment on account.
Chapter 2: Analyzing Transactions
155.
The process of transferring the debits and credits from the journal entries to the accounts is called
a.
sliding
b.
transposing
c.
journalizing
d.
posting
156.
The posting process will include the transfer of which of the following data from the journal to the account?
a.
date, amount (debit or credit)
b.
date, amount (debit or credit), journal page number
c.
amount (debit or credit), account number
d.
date, amount (debit or credit) account number
157.
The Posting Reference columns are used to trace transactions from the accounts to the journal. What will
be
entered in the Posting Reference column of (1) the journal and (2) the account?
a.
(1) the amount of the debit or credit and (2) the journal page number
b.
(1) the journal page number and (2) the date of the transaction
c.
(1) the journal page number and (2) the account number
d.
(1) the account number and (2) the journal page number
Chapter 2: Analyzing Transactions
The chart of accounts for the Corning Company includes the following:
Account Name
Account Number
Cash
11
Accounts Receivable
13
Prepaid Insurance
15
Accounts Payable
21
Unearned Revenue
24
Corning, Capital
31
Corning, Drawing
32
Fees Earned
41
Salaries Expense
54
Rent Expense
56
Page 3 of the journal contains the following entry:
Prepaid Insurance
1,530
Cash
1,530
158.
What is the posting reference that will be found in the cash account?
a.
11
b.
15
c.
3
d.
13
Chapter 2: Analyzing Transactions
159.
What is the posting reference that will be found in the prepaid insurance account?
a.
11
b.
15
c.
3
d.
13
160.
What posting references will be found in the journal entry?
a. 15, 11
b. 15, 3
c. 11, 3
d. 3, 15
Chapter 2: Analyzing Transactions
161.
The chart of accounts for the Miguel Company includes the following:
Account Name
Account Number
Cash
11
Accounts Receivable
13
Prepaid Insurance
15
Accounts Payable
21
Unearned Revenue
24
Miguel, Capital
31
Miguel, Drawing
32
Fees Earned
41
Salaries Expense
54
Rent Expense
56
Page 3 of the journal contains the following transaction:
Cash
640
Fees Earned
640
What posting references will be found in the journal entry?
a. 41, 3
b. 3, 11
c. 11, 41
d. 11, 3
Chapter 2: Analyzing Transactions
162.
The chart of accounts for the Miguel Company includes the following:
Account Name
Account Number
Cash
11
Accounts Receivable
13
Prepaid Insurance
15
Accounts Payable
21
Unearned Revenue
24
Miguel, Capital
31
Miguel, Drawing
32
Fees Earned
41
Salaries Expense
54
Rent Expense
56
Page 5 of the journal contains the following transaction:
Salaries Expense
525
Cash
525
What is the posting reference that will be found in the salaries expense account?
a.
5
b.
11
c.
54
d.
21
Chapter 2: Analyzing Transactions
163.
Proof that the dollar amount of the debits equals the dollar amount of the credits in the ledger means
a.
all of the information from the journal was correctly transferred to the ledger
b.
all accounts have their correct balances in the ledger
c.
only the journal is accurate; the ledger may be incorrect
d.
only that the debit dollar amounts equal the credit dollar amounts
164.
That the total dollar amount of the debits equal the total dollar amount of the credits in the ledger accounts can
be
verified through a(n):
a.
chart of accounts
b.
trial balance
c.
income statement
d.
balance sheet
Chapter 2: Analyzing Transactions
165.
Randomly listed below are the steps for preparing a trial balance:
(1)
Verify that the total of the Debit column equals the total of the Credit column.
(2)
List the accounts from the ledger and enter their debit or credit balance in the Debit or
Credit column of the trial balance.
(3)
List the name of the company, the title of the trial balance, and the date the trial
balance
is prepared.
(4)
Total the Debit and Credit columns of the trial balance.
What is the proper order of these steps?
a. (3), (2), (4), (1)
b. (2), (3), (4), (1)
c. (3), (2), (1), (4)
d. (4), (3), (2), (1)
166.
A trial balance is prepared to
a.
prove that there were no errors made in recording transactions into the journal
b.
prove that no errors were made in posting to the ledger
c.
prove that each account balance is correct
d.
discover errors that affect the equality of debits and credits