Chapter 2

Which of the following statements about an account is true

• 1. The right side of an account is the debit or increase side.

• 1. An account is an individual accounting record of increases and decreases in specific asset, liability, and owner’s equity items.

• 1. There are separate accounts for specific assets and liabilities but only one account for owner’s equity items.

• 1. The left side of an account is the credit or decrease side.

Debits:

• increase both assets and liabilities.

• decrease both assets and liabilities.

• increase assets and decrease liabilities.

• decrease assets and increase liabilities.

revenue account:

• is increased by debits.

• is decreased by credits.

• has a normal balance of a debit.

• is increased by credits.

Accounts that normally have debit balances are:

• (a) assets, expenses, and revenues.
  

• (b) assets, expenses, and owner’s capital.
  

• (c) assets, liabilities, and owner’s drawings.

• (d) assets, owner’s drawings, and expenses.

The expanded accounting equation is:

• Assets 1 Liabilities = Owner’s Capital + Owner’s

  Drawings + Revenues + Expenses.

• Assets = Liabilities + Owner’s Capital + Owner’s

  Drawings + Revenues - Expenses.

• Assets 5 Liabilities - Owner’s Capital - Owner’s

  Drawings - Revenues - Expenses.

• Assets 5 Liabilities + Owner’s Capital - Owner’s

  Drawings + Revenues - Expenses.

Which of the following is not part of the recording (LO 2)

process?

• Analyzing transactions.

• Preparing a trial balance.

• Entering transactions in a journal.

• Posting transactions.

which of the following statements about a journal is false?

• It is not a book of original entry.

• It provides a chronological record of transactions.

• It helps to locate errors because the debit and credit

  amounts for each entry can be readily compared.

• It discloses in one place the complete effect of a transaction

The purchase of supplies on account should result in:

• 1.  a debit to Supplies Expense and a credit to Cash.

• 1. a debit to Supplies Expense and a credit to Accounts payable

• a debit to Supplies and a credit to Accounts Payable.

• a debit to Supplies and a credit to Accounts

  Receivable.

The order of the accounts in the ledger is:

• 1. assets, revenues, expenses, liabilities, owner’s cap-

     ital, owner’s drawings.

• 1. assets, liabilities, owner’s capital, owner’s draw-

     ings, revenues, expenses.

• 1. owner’s capital, assets, revenues, expenses, liabili-

     ties, owner’s drawings.

• 1. revenues, assets, expenses, liabilities, owner’s

     capital, owner’s drawings.

A ledger:

• 1. contains only asset and liability accounts.

• 1. should show accounts in alphabetical order.

• 1. is a collection of the entire group of accounts

     maintained by a company.

• 1. is a book of original entry.