Chapters 3 5 Review 1 A business transaction

Chapters 3 -5 Review

1 A business transaction affects at least how many accounts? A. B. C. D. One Two Three Four

1 A business transaction affects at least how many accounts? A. B. C. D. One Two Three Four Double-entry accounting requires that the Debits equal the Credits – must have at least two accounts, may have more – must keep the equation in balance

2 The owner’s claims to a business’ assets are: A. B. C. D. Assets Liabilities Owner’s Equity Cash in Bank

3 The account Accounts Receivable is an example of: A. B. C. D. An Asset A Liability Owner’s Equity None of the above

4 All of the following account titles are assets titles except: A. B. C. D. Office Furniture Accounts Payable Cash in Bank Equipment

5 If the creditor's financial claim to property totals $1, 000 and the owner's financial claim to property totals $11, 000, the property value is: A. B. C. D. $10, 000 $11, 000 $12, 000 $1, 000

5 If the creditors’ financial claim to property totals $1, 000 and the owner's financial claim to property totals $11, 000, the property value is: A. B. C. D. $10, 000 $11, 000 $12, 000 $1, 000 A = L + OE Assets are property Liabilities are creditors’ financial claim to the property Owner’s Equity is the owner’s financial claim to the property

6 Each of the following is a business expense except a payment for: A. B. C. D. Advertising Monthly rent Utility bills Equipment

7 A purchase of a desk on account will increase Office Furniture and will also increase: A. B. C. D. Cash in Bank Marie Krabish, Capital Accounts Receivable Accounts Payable

8 If Paul Abdou deposits $30, 000 in a checking account in the name of his business, the two accounts affected are: A. B. C. D. Cash in Bank & Accounts Payable Cash in Bank & Accounts Receivable Cash in Bank & Paul Abdou, Withdrawals Cash in Bank & Paul Abdou, Capital

9 A business transaction can affect two accounts on the same side of the accounting equation and still leave the equation in balance. A. True B. False

9 A business transaction can affect two accounts on the same side of the accounting equation and still leave the equation in balance. A. True B. False Example: Receive cash on accounts receivable Example: Write a check to purchase office equipment

10 The list of all the accounts used by a business to record its transactions is: A. B. C. D. Double-entry accounting The normal balance T accounts The chart of accounts

11 A chart of accounts is limited to 50 accounts. A. True B. False

12 The amount entered on the left side of an account is: A. B. C. D. The debit The normal balance The account with the lowest account # The asset account

13 A credit to an account always decreases it, a debit to an account always increases it. A. True B. False

13 A credit to an account always decreases it, a debit to an account always increases it. A. True B. False See the tan sheet – review all

14 The normal balance (increase) side of any asset account is the: A. B. C. D. Debit side Credit side Right Side None of these

15 The normal balance (increase) side of any liability account is the: A. B. C. D. Debit side Credit side Left side None of these

16 The normal balance (increase) side of the owner’s equity account is the: A. B. C. D. Debit side Credit side Left side None of these

17 Debits must equal credits: A. B. C. D. In a T account On the equation’s left side One the equation’s right side For each transaction

18 How many steps are there to analyzing a business transaction? A. B. C. D. Two Four Six Eight

18 How many steps are there to analyzing a business transaction? A. B. C. D. Two Four Six Eight 1) Identify the accounts affected 2) Classify the accounts affected 3) Determine the amount of the increase or decrease for each account 4) Make sure the accounting equation remains in balance

19 An expense account is a: A. B. C. D. Permanent liability account Permanent asset account Temporary owner’s equity account Temporary revenue account

19 An expense account is a: A. B. C. D. Permanent liability account Permanent asset account Temporary owner’s equity account Temporary revenue account See the tan sheet

20 The following applies to Temporary accounts : A. Balances are carried forward to the next accounting period B. Balances are transferred to capital and start over at a zero balance for the next accounting period C. They are the only accounts listed on the Chart of Accounts D. Balances are always a credit since they are actually Capital accounts

Are you ready for the test?