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
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
