Instant Download with all chapters and Answers
Sample Chapters
*you will get test bank in PDF in best viewable format after buy*
College Accounting: A Practical Approach, Cdn. 11e (Slater)
Chapter 2 Debits and Credits: Analyzing and Recording Business Transactions
2.1 Setting up and organizing a chart of accounts.
1) A chart of accounts
A) is set up in alphabetical order.
B) includes account balances.
C) is a listing of all the accounts used by a company.
D) All of the above are correct.
Answer: C
Diff: 1
Objective: 2-1
2) 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.
Answer: A
Diff: 2
Objective: 2-1
3) The beginning balance in the Computers account was $2,500. The company purchased an additional $500
worth of computers. The balance in the account is
A) debit of $2,000.
B) credit of $3,000.
C) debit of $3,000.
D) credit of $2,000.
Answer: C
Diff: 1
Objective: 2-1
4) The chart of accounts
A) is a numbered list of all of the business’ accounts.
B) allows accounts to be located quickly.
C) can be expanded as the business grows.
D) All of the above are correct.
Answer: A
Diff: 1
Objective: 2-1
5) Cash increases on the debit side of the account.
Answer: TRUE
Diff: 1
Objective: 2-1
6) Revenues are recorded when earned.
Answer: TRUE
Diff: 1
2
ScholarStock
Objective: 2-1
7) A chart of accounts is a listing of the accounts and their ending balances.
Answer: FALSE
Diff: 1
Objective: 2-1
8) Revenue increases on the debit side of the account.
Answer: FALSE
Diff: 1
Objective: 2-1
9) Accounts Payable increases on the credit side of the account.
Answer: TRUE
Diff: 1
Objective: 2-1
10) Withdrawals increases on the debit side of the account.
Answer: TRUE
Diff: 2
Objective: 2-1
11) Selected accounts from the ledger of Thomas Company appear below. For each account, indicate the
following:
a. 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
b. In the second column, indicate the normal balance of the account by inserting a Dr. or Cr.
Account Type of Account Normal Balance
1. Office Supplies ________ ________
2. Accounts Receivable ________ ________
3. Fees Earned ________ ________
4. Thomas, Withdrawals ________ ________
5. Accounts Payable ________ ________
6. Salaries Expense ________ ________
7. Thomas, Capital ________ ________
8. Accounts Receivable ________ ________
9. Equipment ________ ________
10. Telephone Expense ________ ________
Answer:
Account Type of Normal
Account Balance
1. Office Supplies A Dr
2. Accounts Receivable A Dr
3. Fees Earned R Cr
4. Thomas, Withdrawals N Dr
5. Accounts Payable L Cr
6. Salaries Expense E Dr
7. Thomas, Capital N Cr
8. Accounts Receivable A Dr
9. Equipment A Dr
3
ScholarStock
10. Telephone Expense E Dr
Diff: 2
Objective: 2-1
12) 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: 3
Objective: 2-1
13) 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: 2
Objective: 2-1
2.2 Recording transactions in T accounts according to the rules of debit and credit.
1) An accounting device used to record increases and decreases in individual assets, liabilities, capital, revenue,
expenses, and withdrawals is a(n)
A) chart of accounts.
B) account.
C) trial balance.
D) footing.
Answer: B
Diff: 2
Objective: 2-2
2) A compound entry is
A) a transaction involving more than one debit and/or credit.
B) used to prepare the trial balance.
C) the same as the chart of accounts.
D) found on the income statement.
Answer: A
Diff: 1
Objective: 2-2
3) What device is used to record the increases and decreases caused by business transactions to individual assets,
liabilities, and owner’s equity?
A) Chart of accounts
B) Account
C) Trial Balance
D) Footings
Answer: B
Diff: 1
Objective: 2-2
4) A formal account that has columns for date, explanation, post reference, debit, and credit is called the
A) T account.
B) standard account form.
C) ledger.
D) chart of accounts.
4
ScholarStock
Answer: B
Diff: 2
Objective: 2-2
5
ScholarStock
5) A ledger
A) is a group of accounts and their balances.
B) can replace the financial statements.
C) is the same as a chart of accounts.
D) None of these answers are correct.
Answer: A
Diff: 1
Objective: 2-2
6) The left side of any account is the
A) debit side.
B) credit side.
C) ending balance.
D) footings.
Answer: A
Diff: 1
Objective: 2-2
7) The right side of any account is the
A) debit side.
B) credit side.
C) ending balance.
D) footings.
Answer: B
Diff: 1
Objective: 2-2
8) The side that increases the account balance, by the rules of debit and credit, is said to be the
A) debit side.
B) credit side.
C) normal balance.
D) None of these answers are correct.
Answer: C
Diff: 2
Objective: 2-2
9) The Accounts Payable account is
A) a revenue, and it has a normal debit balance.
B) an expense, and it has a normal credit balance.
C) a liability, and it has a normal debit balance.
D) a liability, and it has a normal credit balance.
Answer: D
Diff: 1
Objective: 2-2
10) An account that would be increased by a credit is
A) Cash.
B) Accounts Receivable.
C) Utilities Expense.
D) Accounts Payable.
Answer: D
Diff: 1
Objective: 2-2
6
ScholarStock
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.
Answer: A
Diff: 2
Objective: 2-2
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.
Answer: A
Diff: 2
Objective: 2-2
13) A credit may signify a(n)
A) increase in assets.
B) decrease in liabilities.
C) increase in capital.
D) increase in withdrawals.
Answer: C
Diff: 2
Objective: 2-2
14) Which of the following types of accounts has a normal credit balance?
A) Withdrawals
B) Assets
C) Expenses
D) Revenues
Answer: D
Diff: 1
Objective: 2-2
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.
Answer: D
Diff: 1
Objective: 2-2
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.
Answer: D
Diff: 2
7
ScholarStock
Objective: 2-2
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
Answer: D
Diff: 1
Objective: 2-2
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.
Answer: A
Diff: 2
Objective: 2-2
19) Which of the following accounts would be increased by a debit?
A) Cash
B) Accounts Payable
C) Capital
D) Fees Earned
Answer: A
Diff: 1
Objective: 2-2
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
Answer: B
Diff: 2
Objective: 2-2
21) Which of the following entries would be used to record the billing of fees earned?
A) Debit Accounts Receivable and credit Rental Fees
B) Credit Cash and credit Rental Fees
C) Debit Cash and credit Rental Fees
D) Debit Cash and debit Rental Fees
Answer: A
Diff: 2
Objective: 2-2
22) Which of the statements of the rules of debit and credit is true?
A) Decrease Accounts Receivable with a credit and the normal balance is a credit.
B) Increase Accounts Payable with a credit and the normal balance is a credit.
C) Increase Capital with a debit and the normal balance is a debit.
D) Decrease Cash with a debit and the normal balance is a debit.
Answer: B
8
ScholarStock
Diff: 2
Objective: 2-2
9
ScholarStock
23) Which of the following entries records the investment of cash by John, owner of a sole proprietorship?
A) Debit John, Capital; credit Cash
B) Debit Cash; credit John, Withdrawals
C) Debit John, Withdrawals; credit Cash
D) Debit Cash; credit John, Capital
Answer: D
Diff: 2
Objective: 2-2
24) Dennis, owner of Dennis’ Golf Center, withdrew $700 in cash from the business. Record the transaction by
A) debiting Dennis, Withdrawals, $700; crediting Cash, $700.
B) debiting Accounts Receivable, $700; crediting Cash, $700.
C) debiting Expense, $700; crediting Cash, $700.
D) debiting Dennis, Withdrawals, $700; crediting Dennis, Capital, $700.
Answer: A
Diff: 2
Objective: 2-2
25) The entry to record Tom’s payment of a home telephone bill is
A) debit Telephone Expense; credit Accounts Payable.
B) debit Tom’s Withdrawals; credit Cash.
C) debit Telephone Expense; credit Cash.
D) debit Tom’s Withdrawals; credit Accounts Payable.
Answer: B
Diff: 3
Objective: 2-2
26) Extreme Home bought painting equipment on account for $2,200. The entry would include:
A) debit to Supplies Expense, $2,200; credit to Cash, $2,200.
B) debit to Equipment, $2,200; credit to Cash, $2,200.
C) debit to Equipment, $2,200; credit to Accounts Payable, $2,200.
D) debit to Supplies Expense, $2,200; credit to Accounts Payable, $2,200.
Answer: C
Diff: 2
Objective: 2-2
27) The owner of Wolverines R Us paid his personal MasterCard bill using a company cheque. The correct entry
to record the transaction is
A) credit Cash; debit Capital.
B) credit Cash; debit Supplies Expense.
C) credit Cash; debit Withdrawals.
D) credit Cash; debit Accounts Receivable.
Answer: C
Diff: 3
Objective: 2-2
28) Carrie flew to San Francisco on a business trip. The purchase price of the ticket was $379 and it was bought
on account. The entry to record the transaction is:
A) debit Accounts Payable, $379; credit Travel Expense, $379.
B) debit Capital, $379; credit Accounts Payable, $379.
C) debit Travel Expense, $379; credit Accounts Payable, $379.
D) debit Travel Expense, $379; credit Cash, $379.
Answer: C
10
ScholarStock
Diff: 2
Objective: 2-2
29) The Accounts Receivable account has total debit postings of $1,700 and credit postings of $900. The balance
of the account is
A) $800 debit.
B) $800 credit.
C) $2,600 credit.
D) $2,600 debit.
Answer: A
Diff: 1
Objective: 2-2
30) The Accounts Payable account has total debit postings of $800 and credit postings of $1,400. The balance is
A) $2,200 debit.
B) $600 credit.
C) $2,200 credit.
D) $600 debit.
Answer: B
Diff: 1
Objective: 2-2
31) Office Supplies had a normal starting balance of $75. There were debit postings of $90 and credit postings of
$70 during the month. The ending balance is
A) $55 debit.
B) $55 credit.
C) $95 debit.
D) $95 credit.
Answer: C
Diff: 2
Objective: 2-2
32) Accounts Receivable has a normal balance of $1,000. After collecting $700, the balance in the account is
A) debit $300.
B) debit $1,700.
C) credit $300.
D) credit $1,700.
Answer: A
Diff: 1
Objective: 2-2
33) The beginning balance in Cash was $3,500. Additional cash of $1,000 was received. Cheques were written
totaling $1,500. The cash balance is
A) $2,000.
B) $6,000.
C) $4,500.
D) $3,000.
Answer: D
Diff: 2
Objective: 2-2
11
ScholarStock
34) A credit to an asset account was posted to the Capital account. This error would cause
A) assets to be overstated.
B) liabilities to be overstated.
C) Capital to be understated.
D) Both A and C are correct.
Answer: A
Diff: 3
Objective: 2-2
35) A credit to a liability account was posted to an expense account. This error would cause
A) assets to be overstated.
B) liabilities to be overstated.
C) expenses to be overstated.
D) None of the above are correct.
Answer: D
Diff: 3
Objective: 2-2
36) A debit to an expense account was posted to a revenue account. This error would cause
A) assets to be overstated.
B) liabilities to be overstated.
C) revenue to be understated.
D) None of the above are correct.
Answer: C
Diff: 3
Objective: 2-2
37) A credit to an asset account was posted to a revenue account. This error would cause
A) assets to be overstated.
B) revenue to be overstated.
C) expenses to be overstated.
D) Both A and C are correct.
Answer: D
Diff: 3
Objective: 2-2
38) A debit to a liability account was posted to the Capital account. This error would cause
A) assets to be overstated.
B) liabilities to be overstated.
C) Capital to be overstated.
D) None of the above are correct.
Answer: B
Diff: 3
Objective: 2-2
39) A debit to an asset account was posted to an expense account. This error would cause
A) liabilities to be overstated.
B) expenses to be overstated.
C) assets to be understated
D) Both B and C are correct.
Answer: D
Diff: 3
Objective: 2-2
12
ScholarStock
13
ScholarStock
40) A debit to a liability account was posted to a revenue account. This error would cause
A) revenues to be understated.
B) liabilities to be understated.
C) Capital to be overstated.
D) None of the above are correct.
Answer: A
Diff: 3
Objective: 2-2
41) A debit to an asset account was posted to a liability account. This error would cause
A) assets to be understated.
B) liabilities to be overstated.
C) Capital to be overstated.
D) None of the above are correct.
Answer: A
Diff: 3
Objective: 2-2
42) A credit to an asset account was posted to a liability account. This error would cause
A) assets to be understated.
B) liabilities to be overstated.
C) Capital to be understated.
D) None of the above are correct.
Answer: B
Diff: 3
Objective: 2-2
43) The business incurred an expense and paid it immediately. To record this,
A) an expense is debited and a liability is credited.
B) an expense is debited and an asset is credited.
C) an expense is debited and Capital is credited.
D) None of these are correct.
Answer: B
Diff: 2
Objective: 2-2
44) The business provided services to a cash customer. To record this,
A) an asset is debited and a liability is credited.
B) an asset is debited and a revenue is credited.
C) an expense is debited and Capital is credited.
D) None of these are correct.
Answer: B
Diff: 2
Objective: 2-2
45) The owner invested personal equipment in the business. To record this transaction,
A) debit Equipment and credit Accounts Payable.
B) debit Accounts Payable and credit Equipment.
C) debit Equipment and credit Capital.
D) credit Equipment and debit Capital.
Answer: C
Diff: 2
Objective: 2-2
14
ScholarStock
46) Which of the following errors would cause the trial balance to be out of balance?
A) An entry is posted twice
B) An entry is not posted at all
C) A debit is entered as $100 and the credit is entered at $1,000
D) None of these answers are correct.
Answer: C
Diff: 3
Objective: 2-2
47) The business bought supplies on account. To record this,
A) an expense is debited and a liability is credited.
B) an asset is debited and an asset is credited.
C) an asset is debited and a liability is credited.
D) None of these are correct.
Answer: C
Diff: 2
Objective: 2-2
48) A liability would be credited and an expense debited if
A) the business paid a creditor.
B) the business incurred an expense and did not pay the expense immediately.
C) the business bought supplies on account.
D) the business bought supplies for cash.
Answer: B
Diff: 2
Objective: 2-2
49) One asset would be debited and another credited if
A) the business provided services to a cash customer.
B) the business paid a creditor.
C) the business bought supplies paying cash.
D) the business provided services to a credit customer.
Answer: C
Diff: 2
Objective: 2-2
50) An asset would be debited and a liability credited if
A) the business bought supplies for cash.
B) the business incurred an expense and paid it.
C) the business incurred an expense and did not pay for the expense immediately.
D) the business bought equipment on account.
Answer: D
Diff: 2
Objective: 2-2
51) What would be the effect on accounts if the business provided services to a customer on account?
A) An asset would be debited and an expense credited.
B) Capital would be debited and revenue credited.
C) An asset would be debited and revenue credited.
D) An asset would be debited and Capital credited.
Answer: C
Diff: 2
Objective: 2-2
15
ScholarStock
16
ScholarStock
52) What would be the effect on accounts if the business provided services to a customer collecting cash?
A) An asset would be debited and an expense credited.
B) Capital would be debited and revenue credited.
C) An asset would be debited and revenue credited.
D) An asset would be debited and Capital credited.
Answer: C
Diff: 2
Objective: 2-2
53) What would be the effect on accounts if the owner withdrew cash?
A) An asset would be debited and an expense credited.
B) Withdrawals would be debited and an asset credited.
C) An asset would be debited and a revenue credited.
D) An asset would be debited and Capital credited.
Answer: B
Diff: 2
Objective: 2-2
54) What would be the effect on accounts if the business purchased office supplies for cash?
A) An asset would be debited and an expense credited.
B) Capital would be debited and revenue credited.
C) An asset would be debited and revenue credited.
D) An asset would be debited and an asset credited.
Answer: D
Diff: 2
Objective: 2-2
55) What would be the effect on accounts if the business received the telephone bill but did not pay it
immediately?
A) An expense would be debited and a liability credited.
B) Capital would be debited and revenue credited.
C) An expense would be debited and an asset credited.
D) An asset would be debited and Capital credited.
Answer: A
Diff: 2
Objective: 2-2
56) An account that would be increased by a debit is
A) Cash.
B) Fees Earned.
C) Capital.
D) Accounts Payable.
Answer: A
Diff: 1
Objective: 2-2
57) Which of the following groups of accounts have a normal credit balance?
A) Revenue, liabilities, and capital
B) Assets, capital, and withdrawals
C) Liabilities, expenses, and assets
D) Assets, expenses, and withdrawals
Answer: A
Diff: 1
17
ScholarStock
Objective: 2-2
58) What device is used to record the increases and decreases caused by business transactions to individual assets,
liabilities, and owner’s equity?
A) Chart of accounts
B) Account
C) Trial Balance
D) Footings
Answer: B
Diff: 1
Objective: 2-2
59) A term used for obtaining the balance of an account is
A) adding.
B) crediting.
C) debiting.
D) footing.
Answer: D
Diff: 2
Objective: 2-2
60) The Office Supplies account is
A) a revenue, and it has a normal debit balance.
B) an expense, and it has a normal credit balance.
C) an asset, and it has a normal debit balance.
D) an asset, and it has a normal credit balance.
Answer: C
Diff: 2
Objective: 2-2
61) A transaction that has more than one debit and one credit is called a
A) chart of accounts.
B) compound entry.
C) ledger.
D) credit entry.
Answer: B
Diff: 1
Objective: 2-2
62) The first step in analyzing a transaction is
A) to decide if the accounts are increasing or decreasing.
B) to decide to which categories the accounts belong.
C) to decide where the amounts belong.
D) to decide which accounts are affected.
Answer: D
Diff: 2
Objective: 2-2
63) The normal balance of an account is
A) debit.
B) credit.
C) the side that decreases.
D) the side that increases.
18
ScholarStock
Answer: D
Diff: 2
Objective: 2-2
64) When a computer is bought on account, the result is
A) an increase in the asset Computer and an increase in the liability Accounts Payable.
B) an increase in the asset Computer and a decrease in the liability Accounts Payable.
C) a decrease in the asset Computer and an increase in the liability Accounts Payable.
D) a decrease in the asset Computer and a decrease in the liability Accounts Payable.
Answer: A
Diff: 2
Objective: 2-2
65) Accounts Payable had a normal starting balance of $600. There were debit postings of $350 and credit
postings of $200 during the month. The ending balance is
A) $750 credit.
B) $750 debit.
C) $450 debit.
D) $450 credit.
Answer: D
Diff: 3
Objective: 2-2
66) The beginning balance in Cash was $400. Additional cash of $800 was received. Cheques were written for
$700. The Cash balance is
A) $900.
B) $500.
C) $700.
D) $800.
Answer: B
Diff: 2
Objective: 2-2
67) Given the following list of accounts with normal balances, what are the trial balance totals of the debits and
credits?
Cash $500
Accounts Receivable 100
Capital 200
Withdrawals 100
Service Fees 700
Rent Expense 200
A) $800 debit, $1,000 credit
B) $800 debit, $800 credit
C) $1,000 debit, $1,000 credit
D) $900 debit, $900 credit
Answer: D
Diff: 3
Objective: 2-2
19
ScholarStock
