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Exam 2: Debits and Credits: Analyzing and Recording Business Transactions

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Question 41

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Accounts Payable had a normal starting balance of $750. There were debit postings of $600 and credit postings of $350 during the month. The ending balance is

A) $500 credit.
B) $1,000 debit.
C) $500 debit.
D) $1,000 credit.

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Question 42

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On which financial statement would you find the ending Capital balance?

A) Income statement
B) Balance Sheet
C) Statement of owner's equity
D) Both B and C are correct.

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Question 43

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Determine the ending owner's equity of a business having a beginning owner's equity of $ 9,500, additional investments of $450, withdrawals of $ 1,000, and net income of $ 1,400.

Which of the following types of accounts has a normal debit balance?

Which of the following types of accounts has a normal credit balance?

Accounts Payable indicates amounts owed to us by our suppliers.

A transaction that involves more than one credit or more than one debit is called a compound entry.

A credit may signify a(n)

A T account is used for demonstration purposes.

A debit to an expense account was posted to a revenue account. This error would cause

Which type of account would be reported on the income statement?

The right side of any account is the

When the owner invests computer equipment in the business, cash is increased.

When cash is increased, the Cash account is debited.

Net income or net loss for a period is calculated by the following formula:

Each part of a business transaction is recorded in the accounting equation under a specific account.

Which of the following groups of accounts have a normal debit balance?

The left column of a financial statement is often used to

Below is a chart of accounts. Following is a series of transactions. Indicate for each transaction the accounts that should be debited and credited by inserting the proper account number in the space provided. $\begin{array} { l l } 111 \text { Cash } & 312 \text { R. Andrews, Withdrawals } \\112 \text { Accounts Receivable } & 411 \text { Service Fees } \\121 \text { Office Equipment } & 511 \text { Salaries Expense } \\211 \text { Accounts Payable } & 512 \text { Rent Expense } \\311 \text { R. Andrews, Capital } & 513 \text { Advertising Expense }\end{array}$ Debit         Credit          Transaction ________ ________ 1. Purchased office equipment on account. ________ ________ 2. Paid salaries for the week. ________ ________ 3. Invested additional cash in the business. ________ ________ 4. Received cash for services performed. ________ ________ 5. Billed a client on account for services performed. ________ ________ 6. Paid accounts payable. ________ ________ 7. Collected accounts receivable. ________ ________ 8. Withdrew cash for personal use. ________ ________ 9. Paid advertising expense. ________ ________ 10. Paid rent expense for the month.

Identify the normal balance for each of the following accounts by placing a Dr. (debit) or a Cr. (credit) in the space provided. ________ 1. Computer ________ 2. M. Bryant, Withdrawals ________ 3. M. Bryant, Capital ________ 4. Legal Fees ________ 5. Cash ________ 6. Accounts Receivable ________ 7. Accounts Payable ________ 8. Rent Expense ________ 9. Office Equipment ________ 10. Supplies