Accounting Chapter 2 TEST Review

Businesses use accounts to summarize all the information pertaining to a single item

• True

• False

The balance of an account increases on the same side as the normal balance side.

• True

• False

Before a transaction is recorded in the records of a business, it is analyzed to determine which accounts are changed and how

• True

• False

Each transaction changes the balances in at least two accounts.

• True

• False

Cash is an asset account with a normal credit balance.

• True

• False

Capital is an owner's equity account with a normal debit balance.

• True

• False

The left side of a liability account is the normal balance side because liabilities are on the left side of the accounting equation.

• True

• False

The normal balance side of an accounts receivable account is a credit.

• True

• False

Accounts receivable accounts are increased with a debit.

• True

• False

Advertising Expense is increased with a debit.

• True

• False