Test Bank for Financial Accounting 12th Edition Warren, Reeve, Duchac Chapter 2 Analyzing Transactions

Test Bank for Financial Accounting 12th Edition
Warren, Reeve, Duchac

Chapter 2--Analyzing Transactions

Student:

1. Accounts are records of increases and decreases in individual financial statement items.
True False



2. A chart of accounts is a listing of accounts that make up the journal.
True False



3. The chart of accounts should be the same for each business.
True False



4. Accounts payable are accounts that you expect will be paid to you.
True False



5. Consuming goods and services in the process of generating revenues results in expenses.
True False



6. Prepaid expenses are an example of an expense.
True False



7. Unearned Revenues account is an example of a liability.
True False



8. The Drawings account is an example of an expense.
True False

, Test Bank for Financial Accounting 12th Edition
Warren, Reeve, Duchac
9. Accounts in the ledger are usually maintained in alphabetical order.
True False



10. Depending on the account title, the right side of the account is referred to as the credit side.
True False



11. To determine the balance in an account, always subtract credits from debits.
True False



12. The double-entry accounting system records each transaction twice.
True False



13. The increase side of all accounts is the normal balance.
True False



14. Transactions are initially entered into a record called a journal.
True False



15. The process of recording a transaction in the journal is called journalizing.
True False



16. Journalizing is the process of entering amounts in the ledger.
True False



17. Transactions are listed in the journal chronologically.
True False



18. Journalizing transactions using the double-entry bookkeeping system will eliminate fraud.
True False

, Test Bank for Financial Accounting 12th Edition
Warren, Reeve, Duchac
19. Liability accounts are increased by debits.
True False



20. Expense accounts are increased by credits.
True False



21. Revenue accounts are increased by credits.
True False



22. The normal balance of a capital account is a debit.
True False



23. The normal balance of the drawing account is a debit.
True False



24. The normal balance of an expense account is a credit.
True False



25. The normal balance of revenue accounts is a credit.
True False



26. Withdrawals decrease owner's equity and are listed on the income statement as a deduction from revenue.
True False



27. For a month's transactions for a typical medium-sized business, the salary expense account is likely to have
only credit entries.
True False

, Test Bank for Financial Accounting 12th Edition
Warren, Reeve, Duchac
28. For a month's transactions for a typical medium-sized business, the accounts payable account is likely to
have only credit entries.
True False



29. When a business receives a bill from the utility company, no entry should be made until the invoice is paid.
True False



30. An account has three parts to it; a title, an increase side, and a decrease side.
True False



31. The T account got its name because it resembles the letter “T.”
True False



32. The right hand side of a T account is known as a debit and the left hand side is known as a credit.
True False



33. A debit is abbreviated as Db and a credit is abbreviated as Cr.
True False



34. Debiting the cash account will increase the account.
True False



35. A credit to the cash account will increase the account.
True False



36. The cash account will always be debited.
True False