Test Bank for Accounting 25th Edition by Warren

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



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



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



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



37. The recording of cash receipts to the cash account will be done by debiting the
account. True False



38. The recording of cash payments from the cash account is done by entering the
amount as a credit. True False



39. The balance of the account can be determined by adding all of the debits,
adding all of the credits, and adding the amounts together. True False


40. When an owner contributes equipment to the business, he or she retains
ownership of the property. True False



41. Liabilities are debts owed by the business entity. True False