Chapter 2 Recording Business Transactions

What account is used when we pay rent in advance for an office building?

• Rent Expense

• Prepaid Rent

• Rent Payable

• Rent Revenue

Which of these is an asset?

• Notes Payable

• Accounts Receivable

• Unearned Revenue

• Wages Payable

A customer promises to pay us in the future for goods or services we deliver today. We have:

• Accounts Payable

• Notes Payable

• Accounts Receivable

• Unearned Revenue

We promise to pay a vendor later for goods we receive today. We have:

• Accounts Payable

• Accounts Receivable

• Unearned Revenue

• Notes Receivable

Which of these is a liability?

• Accounts Receivable

• Notes Payable

• Building

• Cash

Which of these is not a liability?

• Notes Payable

• Accounts Payable

• Service Revenue

• Unearned Revenue

We get cash today from a customer; we will perform services for them next month. We record:

• Service Revenue

• Unearned Revenue

• Accounts Receivable

• Interest Revenue

What type of account is owner's capital?

• Asset

• Liability

• Equity

• Revenue

• Expense

Which account decreases with a debit?

• Cash

• Notes Payable

• Accounts Receivable

• Rent Expense

Expenses _______ equity, so their normal balance is a ________ balance

• increase; debit

• decrease; debit

• increase; credit

• decrease; credit