Question

1). Credits

a) decrease both assets and liabilities.

b) decrease assets and increase liabilities.

c) increase both assets and liabilities.

d) increase assets and decrease liabilities.

2). The normal balance of an account is the

a) left side.

b) right side.

c) side which increases that account.

d) side that decreases that account.

3). The double-entry system requires that each transaction must be recorded

a) in at least two different accounts.

b) in two sets of books.

c) in a journal and a ledger.

d) first as a revenue and then as an expense.

4). Wilbur Wildcat Company purchased supplies for $1,000. They paid $500 in cash and agreed to pay the balance in 30 days. The journal entry to record this transaction would include a debit to an asset account for $1,000, a credit to a liability account for $500. Which of the following would be the correct way to complete the recording of the transaction?

a) credit an asset account for $500.

b) credit another liability account for $500.

c) credit the Wildcat, Capital account for $500.

d) Debit the Wildcat, Capital account for $500.

5). On June 1, 2012, Sparky Inc. reported a cash balance of $15,000. During June, Sparky made deposits of $3,000 and made disbursements totaling $14,000. What is the cash balance at the end of June?

a) $15,000 debit

b) $18,000 debit

c) $4,000 debit

d) $32,000 debit

6). On August 4, 2012 Artie Enterprises performed cash services of $2,300. The entry to record this transaction would include a

a) debit to service revenue of $2300

b) debit to cash of $2300

c) credit to accounts receivable of $2300

d) debit to accounts receivable of $2300.

7). Which account below is not a subdivision of owner's equity?

a) drawing

b) revenues

c) expenses

d) liabilities

8). Which of the following is the correct sequence of steps in the recording process?

a) posting, journalizing, analyzing

b) analyzing, journalizing, posting

c) analyzing, posting, journalizing

d) journalizing, posting, analyzine

9). Wilma Kitty withdraws $500 cash from her business for personal use. The entry for this transaction will include a debit of $500 to

a) Wilma Kitty, drawing

b) Wilma Kitty, capital

c) owner's salary expense

d) salaries expense

10). A credit is the normal balance for which account listed below?

a) cash

b) accounts receivable

c) rent expense

d) unearned revenue

Answer 1

• Correct Answers are in ‘bold, italics and are underlined’

1). Credits

a) decrease both assets and liabilities.

b) decrease assets and increase liabilities. (as debit increases assets and decreases liabilities)

c) increase both assets and liabilities.

d) increase assets and decrease liabilities.

2). The normal balance of an account is the

a) left side.

b) right side.

c) side which increases that account.

d) side that decreases that account.

3). The double-entry system requires that each transaction must be recorded

a) in at least two different accounts. (one or more accounts are debited and credited, BUT total of debits equals to credits)

b) in two sets of books.

c) in a journal and a ledger.

d) first as a revenue and then as an expense.

4). Wilbur Wildcat Company purchased supplies for $1,000. They paid $500 in cash and agreed to pay the balance in 30 days. The journal entry to record this transaction would include a debit to an asset account for $1,000, a credit to a liability account for $500. Which of the following would be the correct way to complete the recording of the transaction?

a) credit an asset account for $500. (Cash paid $ 500 is to be credited)

b) credit another liability account for $500.

c) credit the Wildcat, Capital account for $500.

d) Debit the Wildcat, Capital account for $500.

5). On June 1, 2012, Sparky Inc. reported a cash balance of $15,000. During June, Sparky made deposits of $3,000 and made disbursements totaling $14,000. What is the cash balance at the end of June?

a) $15,000 debit

b) $18,000 debit

c) $4,000 debit (15000 + 3000 – 14000)

d) $32,000 debit

6). On August 4, 2012 Artie Enterprises performed cash services of $2,300. The entry to record this transaction would include a

a) debit to service revenue of $2300

b) debit to cash of $2300 (because Cash is being received)

c) credit to accounts receivable of $2300

d) debit to accounts receivable of $2300.

7). Which account below is not a subdivision of owner's equity?

a) drawing

b) revenues

c) expenses

d) liabilities (it’s a separate section of balance sheet)

8). Which of the following is the correct sequence of steps in the recording process?

a) posting, journalizing, analyzing

b) analyzing, journalizing, posting

c) analyzing, posting, journalizing

d) journalizing, posting, analyzine

9). Wilma Kitty withdraws $500 cash from her business for personal use. The entry for this transaction will include a debit of $500 to

a) Wilma Kitty, drawing (and Cash is credited)

b) Wilma Kitty, capital

c) owner's salary expense

d) salaries expense

10). A credit is the normal balance for which account listed below?

a) cash

b) accounts receivable

c) rent expense

d) unearned revenue (because it’s a liability nature account and these have ‘credit’ normal balance)