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Accounting Transaction Exercises with Answers, Exercises of Accounting

Harper CollegeAccounting

Accounting Transactions excercises with Multipal Choice solutions

Typology: Exercises

2021/2022

Uploaded on 02/11/2022

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Fall 2020 11th ed. Chapter 2 Question Review
.
Chapter 2 Questions
Multiple Choice
1. Which of the following statement about an account is true?
a. The right side of an account is the debit, or increase side.
b. An account is an individual accounting record of increases and decreases in specific assets, liability,
and stockholders equity items.
c. There are separate accounts for specific assets and liabilities but only one account for stockholders’
equity items.
d. The left side of an account is the credit, or decrease, side.
2. Which of the following are part of the recording process?
a. Analyzing transactions
b. Entering Transactions in a journal
c. Posting journal entries
d. All of the above
3. The right side of a t-account is
a. the balance of an account.
b. the debit side.
c. the credit side.
d. blank.
4. Powers Corporation received a cash advance of $500 from a customer. As a result of this event,
a. assets increased by $500 (Debited).
b. equity increased by $500 (Credited).
c. liabilities decreased by $500 (Debited).
d. Both assets and equity increased by $500 (Debited and Credited).
5. Debits
a. increase both assets and liabilities.
b. decrease both assets and liabilities.
c. increase assets and decrease liabilities.
d. decrease assets and increase liabilities.
6. A debit is NOT the normal balance for which account listed below?
a. Revenue
b. Cash
c. Accounts Receivable
d. Dividends
7. Which of the following describes the classification and normal balance of the Unearned Rent
Revenue account?
a. Asset, debit
b. Liability, credit
c. Revenues, credit
d. Expense, debit
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Chapter 2 Questions

Multiple Choice

  1. Which of the following statement about an account is true? a. The right side of an account is the debit, or increase side. b. An account is an individual accounting record of increases and decreases in specific assets, liability, and stockholders equity items. c. There are separate accounts for specific assets and liabilities but only one account for stockholders’ equity items. d. The left side of an account is the credit, or decrease, side.

  2. Which of the following are part of the recording process? a. Analyzing transactions b. Entering Transactions in a journal c. Posting journal entries d. All of the above

  3. The right side of a t-account is a. the balance of an account. b. the debit side. c. the credit side. d. blank.

  4. Powers Corporation received a cash advance of $500 from a customer. As a result of this event, a. assets increased by $500 (Debited). b. equity increased by $500 (Credited). c. liabilities decreased by $500 (Debited). d. Both assets and equity increased by $500 (Debited and Credited).

  5. Debits a. increase both assets and liabilities. b. decrease both assets and liabilities. c. increase assets and decrease liabilities. d. decrease assets and increase liabilities.

  6. A debit is NOT the normal balance for which account listed below? a. Revenue b. Cash c. Accounts Receivable d. Dividends

  7. Which of the following describes the classification and normal balance of the Unearned Rent Revenue account? a. Asset, debit b. Liability, credit c. Revenues, credit d. Expense, debit

  1. Which accounts normally have credit balances? a. Revenues, liabilities, and dividends b. Revenues, liabilities, and assets c. Revenues, liabilities, and retained earnings d. Revenues, liabilities, and expenses
  2. Which of the following accounts is increased with a debit? a. Land b. Service Revenue c. Interest Payable d. Common Stock
  3. When a company performs a service but has not yet received payment, it a. debits Service Revenue and credits Accounts Receivable. b. debits Accounts Receivable and credits Service Revenue. c. debits Service Revenue and credits Accounts Payable. d. makes no entry until cash is received.
  4. In the first month of operations, the total of the debit entries to the Cash account amounted to $3,000 and the total of the credit entries to the Cash account amounted to $1,800. The Cash account has a a. $1,800 credit balance. b. $3,000 debit balance. c. $1,200 debit balance. d. $1,800 credit balance.
  5. At November 1, 20XX, Johnson Inc. had an Accounts Receivable balance of $200,000. During the month, the company made sales on account of $300,000. In addition, Johnson Inc. collected $400, from customers that owed them money. At November 30, 2018, the Accounts Receivable balance is a. $100,000 debit b. $100,000 credit c. $500,000 debit d. $300,000 credit
  6. Which of the following steps in the accounting process is done after analyzing business transactions? a. Preparing the financial statements b. Preparing a trial balance c. Entering transactions in a journal d. Posting journal entries
  7. On July 7, 20XX, Shireman Enterprises received cash $1,400 for services rendered. The entry to record this transaction will include a. a debit to Service Revenue of $1,400. b. a credit to Accounts Receivable of $1,400.
  1. Selected accounts from the ledger of McDaniel Corporation appear below. For each account, indicate the following: (a) In the first column at the right, indicate the nature of each account, using the following abbreviations: Asset - A Liability - L None of the above - N Expense - E Revenues - R (b) In the second column, indicate the normal balance by inserting Dr. or Cr. Type of Normal Account Balance a. Supplies ……………………………….. b. Notes Payable …………………………. c. Service Revenue………………………. d. Dividends………………………………. e. Accounts Payable…………………….. f. Salaries and Wages Expense………… g. Common Stock………………………… h. Accounts Receivable………………….. i. Equipment…………………………….. j. Notes Receivable………………………
  2. Journalize the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transactions. (USE THE LINES ON THE NEXT PAGE TO RECORD YOUR JOURNAL ENTRIES) Jan. 1 Stockholders invest $40,000 in cash in starting a real estate office operating as a corporation. Jan. 5 Purchased $500 of supplies on credit. Jan. 10 Purchased equipment for $25,000, paying $3,500 in cash and signed a 30-day, $21,500, note payable. Jan. 15 Real estate commissions billed to clients amount to $4,000. Jan. 20 Paid $700 in cash for the current month's rent. Jan. 25 Paid $250 cash on account for office supplies purchased in transaction 2. Jan. 28 Received a bill for $800 for advertising for the current month. Jan. 31 Paid $2,500 cash for office salaries. Jan. 31 Paid $1,200 cash dividends to stockholders. Jan. 31 Received a check for $2,000 from a client in payment on account for commissions billed in transaction 4.

Example: Bought supplies for $500 on Jan. Date Debit Credit

Supplies (^) Jan. 1 500 Cash 500

Exercise Solutions (Cont.)

  1. Swisher Company Trial Balance January 31, 20XX Debit Credit Cash $1, Accounts Receivable 2, Supplies 200 Accounts Payable $1, Common Stock 2, Dividends 1, Service Revenue 3, Rent Expense 500 Salaries and Wages Expense 1, $7,200 $7,
  2. Type of Normal Account Balance a. Supplies ………………………………. A Dr. b. Note Payable …………………………. L Cr. c. Service Revenue………………………. R Cr. d. Dividends………………………………. N Dr. e. Accounts Payable…………………….. L Cr. f. Salaries and Wages Expense………… E Dr. g. Common Stock………………………… N Cr. h. Accounts Receivable………………….. A Dr. i. Equipment…………………………….. A Dr. j. Notes Receivable……………………… A Dr.

Exercise Solutions (Cont.)

Example: Bought supplies for $500 on Jan.^ Date^ Debit^ Credit

 - Supplies Jan. 1. - Cash
  • Cash Jan. 1 40,
    • Common Stock 40,
  • Supplies Jan.
    • Accounts Payable
  • Equipment Jan. 10 25,
    • Cash 3,
    • Notes Payable 21,
  • Accounts Receivable Jan. 15 4,
    • Service Revenue 4,
  • Rent Expense Jan.
    • Cash
  • Accounts Payable Jan.
    • Cash
  • Advertising Expense Jan.
    • Accounts Payable
  • Salaries and Wages Expense Jan. 31 2,
    • Cash 2,
  • Dividends Jan. 31 1,
    • Cash 1,
  • Cash Jan. 31 2,
    • Accounts Receivable 2,