Accounting Quiz

If total assets increased $20,000 during a period and total liabilities increased $12,000 during the same period, the amount and direction (increase or decrease) of the change in owner's equity for that period is a(n):

• $32,000 increase.

• $32,000 decrease.

• $8,000 increase.

• $8,000 decrease.

If revenue was $45,000, expenses were $37,500, and the owner's withdrawals were $10,000, the amount of net income or net loss would be:

• $45,000 net income.

• $7,500 net income.

• $37,500 net loss.

• $2,500 net loss.

Debits:

• increase both assets and liabilities.

• decrease both assets and liabilities.

• increase assets and decrease liabilities.

• decrease assets and increase liabilities.

A revenue account:

• is increased by debits.

• is decreased by credits.

• has a normal balance of a debit.

• is increased by credits.

The purchase of supplies on account should result in:

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

• 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.

Posting:

• normally occurs before journalizing.

• transfers ledger transaction data to the journal.

• is an optional step in the recording process.

• transfers journal entries to ledger accounts.

A trial balance:

• is a list of accounts with their balances at a given time.

• proves the mathematical accuracy of journalized transactions.

• will not balance if a correct journal entry is posted twice.

• proves that all transactions have been recorded.

Adjustments for prepaid expenses:

• decrease assets and increase revenues.

• decrease expenses and increase assets.

• decrease assets and increase expenses.

• decrease revenues and increase assets.