Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall

1 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall College Accounting, 12e (Slater)

Chapter 2 Debits and Credits: Analyzing and Recording Business Transactions

2.1 Learning Objective 2-1

1) A chart of accounts:

• is set up in alphabetical order.
• includes account balances.
• is a listing of all the accounts used by a company.
• All of the above are correct.

Answer: C

Diff: 2

LO: 2-1

AACSB: Reflective Thinking Skills

Learning Outcome: Define accounting terms, accounting concepts and principles

2) Accounts Payable had a normal starting balance of $800. There were debit postings of $600 and credit

postings of $300 during the month. The ending balance is:

• $500 credit.
• $1,000 debit.
• $500 debit.
• $1,000 credit.

Answer: A

Diff: 2

LO: 2-1

AACSB: Analytic Skills

Learning Outcome: Analyze and record transactions and their effects on the financial statements

3) The beginning balance in the Computers account was $2,000. The company purchased an additional

$1000 worth of computers. The balance in the account is:

• debit of $2,000.
• credit of $3,000.
• debit of $3,000.
• credit of $2,000.

Answer: C

Diff: 1

LO: 2-1

AACSB: Analytic Skills

Learning Outcome: Analyze and record transactions and their effects on the financial statements

4) Accounts receivable increases on the debit side of the account.

Answer: TRUE

Diff: 1

LO: 2-1

AACSB: Reflective Thinking Skills

Learning Outcome: Analyze and record transactions and their effects on the financial statements

College Accounting 12th Edition Slater Test Bank Visit TestBankDeal.com to get complete for all chapters

2 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 5) Revenues are recorded when earned.

Answer: TRUE

Diff: 1

LO: 2-1

AACSB: Reflective Thinking Skills

Learning Outcome: Define accounting terms, accounting concepts and principles

6) Selected accounts from the ledger of Thomas Company appear below. For each account, indicate the

following:

• In the first column at right, indicate the type of each account using the following abbreviations:

Asset - A Revenue - R None of the above - N Liability - L Expense - E

• In the second column, indicate the normal balance of the account by inserting a Dr. or Cr.

Account Type of Account Normal Balance

• Office Supplies ______ ______
• Accounts Receivable ______ ______
• Fees Earned ______ ______
• Thomas, Withdrawals ______ ______
• Accounts Payable ______ ______
• Salaries Expense ______ ______
• Thomas, Capital ______ ______
• Accounts Receivable ______ ______
• Equipment ______ ______
• Telephone Expense ______ ______

Answer:

Account Type of Account Normal Balance

• Office Supplies A Dr
• Accounts Receivable A Dr
• Fees Earned R Cr
• Thomas, Withdrawals N Dr
• Accounts Payable L Cr
• Salaries Expense E Dr
• Thomas, Capital N Cr
• Accounts Receivable A Dr
• Equipment A Dr
• Telephone Expense E Dr

Diff: 2

LO: 2-1

AACSB: Reflective Thinking Skills

Learning Outcome: Define accounting terms, accounting concepts and principles

3 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 7) Explain the difference between expenses and withdrawals.Answer: A withdrawal is used for recording the owner's withdrawal of company assets for personal use, and not related to the business. Expenses are costs the company incurs in carrying on operations in its effort to create revenue.

Diff: 2

LO: 2-1

AACSB: Communication Abilities

Learning Outcome: Define accounting terms, accounting concepts and principles

8) Why is Revenue increased on the Credit side? (Explain as it pertains to the expanded accounting equation and its relationship to Owner's Equity.) Answer: Revenue is an increase to owner's equity; Capital is increased on the credit side, 1.

Diff: 1

LO: 2-1

AACSB: Communication Abilities

Learning Outcome: Define accounting terms, accounting concepts and principles

2.2 Learning Objective 2-2

1) An accounting device used to record increases and decreases in individual assets, liabilities, capital,

revenue, expenses, and withdrawals is a(n):

• chart of accounts.
• account.
• trial balance.
• footing.

Answer: B

Diff: 2

LO: 2-2

AACSB: Reflective Thinking Skills

Learning Outcome: Define accounting terms, accounting concepts and principles

2) A compound entry is:

• a transaction involving more than one debit and/or credit.
• used to prepare the trial balance.
• the same as the chart of accounts.
• found on the income statement.

Answer: A

Diff: 1

LO: 2-2

AACSB: Reflective Thinking Skills

Learning Outcome: Define accounting terms, accounting concepts and principles

4 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 3) A formal account that has columns for date, explanation, post reference, debit, and credit is called the:

• T account.
• standard account form.
• ledger.
• chart of accounts.

Answer: B

Diff: 2

LO: 2-2

AACSB: Reflective Thinking Skills

Learning Outcome: Define accounting terms, accounting concepts and principles

4) A ledger:

• is a group of accounts and their balances.
• can replace the financial statements.
• is the same as a chart of accounts.
• None of these answers are correct.

Answer: A

Diff: 1

LO: 2-2

AACSB: Reflective Thinking Skills

Learning Outcome: Define accounting terms, accounting concepts and principles

5) The left side of any account is the:

• debit side.
• credit side.
• ending balance.
• footings.

Answer: A

Diff: 1

LO: 2-2

AACSB: Reflective Thinking Skills

Learning Outcome: Define accounting terms, accounting concepts and principles

6) The right side of any account is the:

• debit side.
• credit side.
• ending balance.
• footings.

Answer: B

Diff: 1

LO: 2-2

AACSB: Reflective Thinking Skills

Learning Outcome: Define accounting terms, accounting concepts and principles