2016 Pearson Canada Inc.

1 © 2016 Pearson Canada Inc.Financial Accounting, 2nd Cdn. Ed. (Waybright) Chapter 2 Analyzing and Recording Business Transactions 2.1 Define accounts and understand how they are used in accounting 1) A listing of all accounts in numerical order is called a chart of accounts.

Answer: TRUE

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

2) Account titles such as marketing expense and depreciation expense would be numbered starting with a 3.

Answer: FALSE

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

3) An account numbered 321 would be considered a shareholders' equity account as it begins with a 3.

Answer: TRUE

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

4) Items of value that a company owns are called shareholders' equity.

Answer: FALSE

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

5) The shareholders' equity section would include the accounts such as retained earnings and revenues.

Answer: TRUE

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

Financial Accounting Canadian 2nd Edition Waybright Test Bank Visit TestBankDeal.com to get complete for all chapters

2 © 2016 Pearson Canada Inc.6) Which is part of shareholders' equity?

• Cash
• Notes payable
• Dividends
• Assets
• Liabilities

Answer: C

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

7) Dividends are paid with cash to shareholders. Dividends are in what category of the chart of accounts?

• Revenue
• Assets
• Shareholders' equity
• Liabilities
• Revenue

Answer: C

Diff: 2

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

8) Dividends, revenues, and expenses all:

• start with the same chart of accounts number.
• start with different chart of accounts numbers.
• appear in the chart of accounts under assets.
• appear in the chart of accounts under liabilities.
• do not appear in the chart of accounts.

Answer: B

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

9) Which of the following would start with a 1 in the chart of accounts?

• Land and buildings
• Depreciation expense and marketing expense
• Merchandise sales and rent revenue
• Common shares and cash
• Accounts payable and notes payable

Answer: A

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

3 © 2016 Pearson Canada Inc.10) Which of the following would start with a 2 in the chart of accounts?

• Income taxes to be paid and wages to be paid
• Common shares and preferred shares
• Cash and accounts receivable
• Sales and fees revenue
• Marketing expense and rent expense

Answer: A

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

11) A chart of accounts includes:

• balances of accounts.
• names of customers
• assets and liabilities.
• accounts with unusual balances.
• account activity.
• vendor account balances.

Answer: C

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

12) Which of the following is an expense account?

• Prepaid insurance
• Advertising
• Accounts payable
• Cash
• Notes payable

Answer: B

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

13) Which of the following is a revenue account?

• Professional fees
• Accounts payable
• Accounts receivable
• Wages
• Cash

Answer: A

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

4 © 2016 Pearson Canada Inc.14) Marketing expenditures account 511 would belong to what category of accounts?

Answer: Expenses

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

15) Monies owed to a company on a written promise to pay a fixed amount of money by a certain date would be called a ________.

Answer: note payable

Diff: 2

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

16) Accounts starting with the number 4 would typically represent ________.

Answer: revenues

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

17) An account starting with a number 1 would indicate ________.

Answer: an asset

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

18) Accounts that start with the numbers 6-9 would probably be ________.

Answer: other revenues and expenses

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge

19) The order in which accounts appear in the chart of accounts is: ________.

Answer: assets, liabilities, shareholders' equity, revenues, expenses

Diff: 1

LO: 2-1 Define accounts and understand how they are used in accounting

Skill: Recall

Blooms: Knowledge