Journals Review

A form for recording transactions in chronological order is:

• Ledger

• T- account

• Journal

• Balance Sheet

Answer explanation

The correct answer is Journal. A journal in accounting is a book where all the financial transactions are recorded in chronological order. A Ledger, T-account, and Balance Sheet have different purposes in accounting.

Assets are increased by

• debit

• credit

Answer explanation

In accounting, assets are increased by a debit. A debit entry increases asset or expense accounts, while it decreases liability, equity or revenue accounts. Therefore, the correct answer to the question is 'debit'.

Liabilities are increased by

• debit

• credit

Answer explanation

Liabilities are increased by credit, not by debit. This is a fundamental concept in accounting, where the double-entry system means that every transaction impacts both sides of the balance sheet. In this case, when a liability is increased, it is credited.

The normal balance of an expense account is a

• debit

• credit

Answer explanation

The question asks about the normal balance of an expense account. The options are 'debit' and 'credit'. The correct answer is 'debit'. This is because, in accounting, expenses are typically recorded as debits. Thus, an expense account normally has a debit balance.

A transaction recorded in a journal is not considered a permanent record of the business.

• true

• false

Answer explanation

The statement in the question is false. A transaction recorded in a journal is indeed considered a permanent record of the business. These journals represent the first entry of a transaction within a company's financial records. Therefore, they serve as the permanent record of all transactions a business engages in.

Click all that apply when you journal the transaction below:

Received cash from owner as investment (there are two correct answers to this question)

• debit: cash

• credit: cash

• debit: Owner, Drawing

• credit: Owner, Capital

Answer explanation

The correct answers are 'debit: cash' and 'credit: Owner, Capital.' When cash is received, it's a debit entry because the company's asset increases. It's an investment from the owner, so the owner's equity (capital) increases, resulting in a credit entry to 'Owner, Capital.'

Click all that apply when you journal the transaction below:

Paid cash for supplies (there are two correct answers to this question)

• debit:

  cash

• debit:

  supplies

• credit:

  cash

• credit:

  supplies

Answer explanation

The journal entry for paying cash for supplies includes a debit to increase the supplies account, which represents an increase in assets. Simultaneously, there is a credit to the cash account, indicating a decrease in assets as the cash is paid out. Hence, the correct answers are 'debit: supplies' and 'credit: cash'.

Click all of the assets below

• cash

• land

• buildings

• Rent

• Sales

Answer explanation

The question asks to identify all assets from the list. Assets are resources with economic value that a person or corporation owns or controls with the expectation that it will provide future benefit. Cash, land, and buildings are all considered assets since they carry a value and can be used to generate income or be sold for a profit. Rent and Sales, however, are not assets but rather methods of generating income.

To increase sales you would

• debit the account

• credit the account

Answer explanation

In accounting, to increase sales, one would credit the account. This is because sales are recorded as a credit in the revenue account, which increases its balance. Thus, the correct answer is 'credit the account'.

Received cash for a service you provide you would debit

• cash

• sales

• accounts receivable

• accounts payable

Answer explanation

The correct answer is 'Cash'. The question asks about the action to be taken when cash is received for a provided service, according to basic accounting principles. When cash is received, the 'Cash' account is debited, indicating an increase in the company's cash on hand.