11) An account is said to have a debit balance if
A) the footing of the debits exceeds the footing of the credits.
B) there are more entries on the debit side than on the credit side.
C) its normal balance is debit without regard to the amounts or number of entries on the debit side.
D) the last entry of the accounting period was posted on the debit side.
12) A debit may signify a(n)
A) increase in asset accounts.
B) increase in liability accounts.
C) increase in the capital account.
D) decrease in expense accounts.
13) A credit may signify a(n)
A) increase in assets.
B) decrease in liabilities.
C) increase in capital.
D) increase in withdrawals.
14) Which of the following types of accounts has a normal credit balance?
A) Withdrawals
B) Assets
C) Expenses
D) Revenues
15) Which of the following types of accounts has a normal debit balance?
A) Withdrawals
B) Assets
C) Expenses
D) All of these answers are correct.
16) When recording transactions in two or more accounts and the totals of the debits and credits are equal, it is called
A) debiting.
B) crediting.
C) posting.
D) double-entry bookkeeping.
17) Which of the following groups of accounts have a normal debit balance?
A) Revenue, liabilities, and capital
B) Assets, capital, and withdrawals
C) Liabilities, expenses, and assets
D) Assets, expenses, and withdrawals
18) The ledger is
A) a group of accounts that records data from business transactions.
B) a tool used to make sure that all accounts have normal balances.
C) a chronological record of the day’s transactions.
D) a tool used to ensure that debits equal credits.
19) Which of the following accounts would be increased by a debit?
A) Cash
B) Accounts Payable
C) Capital
D) Fees Earned
20) What is the proper entry to show the owner making an investment in the company?
A) A credit to Cash and a debit to Capital
B) A debit to Cash and a credit to Capital
C) A debit to Cash and a credit to Revenue
D) A credit to Cash and a debit to Revenue
The Correct Answer and Explanation is :
Here are the correct answers to the multiple-choice questions:
11) A) the footing of the debits exceeds the footing of the credits.
12) A) increase in asset accounts.
13) C) increase in capital.
14) D) Revenues.
15) D) All of these answers are correct.
16) D) double-entry bookkeeping.
17) D) Assets, expenses, and withdrawals.
18) A) a group of accounts that records data from business transactions.
19) A) Cash.
20) B) A debit to Cash and a credit to Capital.
Explanation:
In accounting, the double-entry system is fundamental, ensuring that every transaction affects at least two accounts, maintaining the balance of the accounting equation: Assets = Liabilities + Equity. This system uses debits and credits to record changes in accounts.
Question 11: An account has a debit balance when the total debits exceed the total credits. This is typical for asset and expense accounts. Therefore, option A is correct.
Question 12: A debit entry increases asset accounts. For example, when cash is received, the Cash account (an asset) is debited. Thus, option A is correct.
Question 13: A credit entry increases capital (equity) accounts. When an owner invests in the business, the Capital account is credited, reflecting an increase in owner’s equity. Therefore, option C is correct.
Question 14: Revenue accounts have a normal credit balance. Recording revenue involves crediting the Revenue account, which increases equity. Thus, option D is correct.
Question 15: Asset, expense, and withdrawal (drawing) accounts all have normal debit balances. Debiting these accounts increases their balances. Therefore, option D is correct.
Question 16: Recording transactions in at least two accounts with equal debits and credits is the essence of double-entry bookkeeping. Thus, option D is correct.
Question 17: Accounts with normal debit balances include assets, expenses, and withdrawals. Debits to these accounts increase their balances. Therefore, option D is correct.
Question 18: The ledger is a collection of all accounts used to record business transactions. It provides a complete record of financial activity. Thus, option A is correct.
Question 19: The Cash account is an asset account with a normal debit balance. Debiting Cash increases its balance, such as when receiving cash. Therefore, option A is correct.
Question 20: When an owner invests cash into the business, the Cash account is debited (increasing assets), and the Capital account is credited (increasing equity). Thus, option B is correct.
Understanding these principles is crucial for accurate financial record-keeping and ensuring the integrity of financial statements.