True/False
Indicate whether the sentence or statement is true
or false.
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1.
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Businesses use accounts to summarize all the information pertaining to a single
item.
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2.
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An
accounting device used to analyze transactions is a T account.
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3.
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An
amount recorded on the left side of a T account is a credit.
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4.
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The
normal balance side of an asset account is based on the location of the account in the accounting
equation.
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5.
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Each
asset account has a normal debit balance.
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6.
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Each
liability account has a normal credit balance.
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7.
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The
balance of an account increases on the same side as the normal balance side.
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8.
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The
balance of an account decreases on the side opposite the normal balance side.
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9.
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Asset
accounts increase on the credit side.
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10.
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Before a transaction is recorded in the records of a business, it is analyzed to
determine which accounts are changed and how.
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11.
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Each
transaction changes the balances in at least two accounts.
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12.
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A
list of accounts used by a business is a chart of accounts.
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13.
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Cash
is an asset account with a normal credit balance.
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14.
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Capital is an owner's equity account with a normal debit balance.
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15.
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When
cash is paid for supplies, the supplies account is increased by a debit.
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16.
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Common accounting practice is to record withdrawals as debits directly in the owner's
capital account.
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17.
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The
balance of a drawing account represents the total value of assets taken out of a business by the
owner.
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18.
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The
left side of a liability account is the normal balance side because liabilities are on the left side
of the accounting equation.
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19.
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The
left side of an asset account is the credit side because assets accounts are on the left side of the
accounting equation.
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20.
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A
drawing account is decreased by debits and increased by credits.
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21.
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The
total debits and credits for a transaction do not have to equal.
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22.
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Increases in expense accounts are recorded directly in the owner's capital
account.
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23.
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Increases in expense accounts are recorded as debits because they decrease the owner's
capital account.
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24.
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Increases in revenue accounts are recorded as debits because they increase the owner's
capital account.
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25.
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The
normal balance side of an accounts receivable account is a credit.
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26.
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The
normal balance side of an accounts payable account is a credit.
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27.
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Accounts receivable accounts are increased with a debit.
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28.
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Accounts payable accounts are increased with a debit.
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29.
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Advertising Expense is increased with a debit.
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30.
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Cash
is increased with a credit.
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31.
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Sandra Stern, Drawing is increased with a credit.
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32.
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Sandra Stern, Drawing is decreased with a credit.
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33.
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Accounts Receivable(Bradford Company) is increased with a debit.
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34.
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Prepaid Insurance is decreased with a credit.
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35.
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To
summarize withdrawal information separately from the other records, owner withdrawal transactions are
recorded in the owner's capital account.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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36.
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A
record summarizing all the information pertaining to a single item in the accounting equation is
____. a. | a
debit | c. | an
account | b. | a credit | d. | a T account | | | | |
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37.
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In a
T account, the debit side is ____. a. | the left side | c. | both A and B | b. | the right
side | d. | neither A nor
B | | | | |
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38.
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The
right side of a T account is the ____. a. | debit side | c. | normal balance side | b. | credit
side | d. | equity
side | | | | |
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39.
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If an
amount is recorded on the side of a T account opposite the normal balance side, the account balance
is ____. a. | increased | c. | unaffected | b. | decreased | d. | correct | | | | |
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40.
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The
normal balance side of an asset account is the ____. a. | debit
side | c. | decrease
side | b. | credit
side | d. | right
side | | | | |
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41.
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When
the owner invests cash in a business, the owner's capital account is ____. a. | increased by a
debit | c. | decreased by a
debit | b. | increased by a credit | d. | decreased by a credit | | | | |
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42.
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When
a business pays for insurance, Prepaid Insurance is ____. a. | increased by a
debit | c. | decreased by a
debit | b. | increased by a credit | d. | decreased by a credit | | | | |
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43.
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When
a business buys an asset on one date and agrees to pay on a later date, the transaction is
____. a. | delayed | c. | increased | b. | on account | d. | none of the above | | | | |
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44.
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When
a business pays cash on account, a liability account is ____. a. | increased by a
debit | c. | decreased by a
debit | b. | increased by a credit | d. | decreased by a credit | | | | |
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45.
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When
cash is received from sales, the change in the owner's equity is usually ____. a. | recorded in a
separate revenue account | b. | recorded directly in the owner's capital
account | c. | recorded as interest revenue | d. | always recorded
on the debit side | | |
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46.
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When
a business receives revenue, Sales is ____. a. | increased by a debit | c. | decreased by a debit | b. | increased by a
credit | d. | decreased by a
credit | | | | |
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47.
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The
amount paid for rent is recorded as a debit to ____. a. | Miscellaneous
Expense | c. | |
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