Financial Accounting

How are increases in assets recorded?

• On the credit side

• On the debit side

• On both sides

• Not recorded

How are increases in liabilities recorded?

• On the debit side

• On both sides

• On the credit side

• Not recorded

What is the normal balance of an asset account?

• Credit

• Debit

• No balance

• Either debit or credit

Which of the following is a credit balance account?

• Cash

• Equipment

• Accounts Payable

• Rent Expense

How do debits and credits affect revenue accounts?

• Debits increase, credits decrease

• Debits decrease, credits increase

• Debits and credits both increase

• Debits and credits both decrease

How do debits and credits affect expense accounts?

• Debits increase, credits decrease

• Debits decrease, credits increase

• Debits and credits both increase

• Debits and credits both decrease

Which financial statement shows the distribution of dividends?

• Income statement

• Statement of financial position

• Retained earnings statement

• Statement of cash flows

What is a journal in accounting?

• A report of a company’s financial position

• A document used to record business transactions in chronological order

• A form used for filing taxes

• A record of financial decisions

What is the purpose of the general ledger?

• To summarize the company's revenues

• To keep track of changes in all accounts

• To report annual income

• To record tax transactions

What is a trial balance?

• A detailed financial statement

• A report used to calculate taxes

• A list of accounts and their balances at a given time

• A summary of financial errors