Principles of Accounting I Module 2 Quiz

For a month's transactions for a typical medium-sized business, the salary expense account is likely to have only credit entries.

• True

• False

Liabilities are debts owed by the business entity.

• True

• False

Journalizing always eliminates fraudulent activity.

• True

• False

journal entries can have more than two accounts as long as the debits equal the credits.

• True

• False

posting a part of a transaction to the wrong account will cause the trial balance totals to be unequal.

• True

• False

depending on the account title, the right side of the account is referred to as the credit side.

• True

• False

all owner's equity accounts record increases to the accounts with credits.

• True

• False

Faso Fabricating and Spinoza Fabrication are in the same industry and are located in the same region of the country. They have condensed income statements as follows:

Using horizontal analysis, compute the percentage change in sales for each company.

• Faso: 27.5%; Spinoza: 27.8%

• Faso: 6.6%; Spinoza: 6.4%

• Faso: 7.1%; Spinoza: 6.8%

• Faso: 16.3%; Spinoza: 7.0%

All of the following accounts are increased with a debit except

• Unearned Revenues

• Land

• Accounts Receivable

• Cash

Which of the following entries journalizes the receipt of cash for 2 months' rent? The cash was received in advance of providing the service.

• debit Prepaid Rent; credit Rent Revenue

• debit Cash; credit Unearned Rent

• debit Cash; credit Prepaid Rent

• debit Cash; credit Rent Expense