Chapter 3 Quiz

On a statement of owner’s equity, beginning capital is \$30,000, Net Income for the year is \$11,000 and Drawing for the year is \$6,000, the ending capital amount would be

a. \$30,000.
b. \$35,000.
c. \$47,000.
d. \$25,000.

b. \$35,000

Beginning Capital, \$30,000 + Net Income, \$11,000 – Drawing, \$6,000 = Ending Capital, \$35,000.

The Net Income amount from the Income Statement is transferred to which of the following statements?

a. the profit and loss statement
b. the statement of owner’s equity
c. the balance sheet
d. the trial balance

b. the statement of owner’s equity
The “Net Income” or “Net Loss” is transferred from the income statement to the

a. balance sheet.
b. chart of accounts.
c. statement of owner’s equity.
d. trial balance.

c. statement of owner’s equity
A business pays a creditor on account. The entry to record this transaction is:

a. Debit Accounts Payable; Credit Cash
b. Debit Accounts Receivable; Credit Accounts Payable
c. Debit Cash; Credit Accounts Payable
d. Debit Accounts Receivable; Credit to Cash

a. Debit Accounts Payable; Credit Cash
If a trial balance is not in balance (the Debit and Credit columns are not equal), a logical first step is to

a. check each account balance calculation.
b. check each account balance in the general ledger to the trial balance number.
c. check the addition of each column.
d. divide the difference by either 9 or 2

c. check the addition of each column
The classification and normal balance of the salaries expense account is:

a. an expense with a credit balance
b. a liability with a debit balance
c. an asset with a debit balance
d. an expense with a debit balance

d. an expense with a debit balance
The account used to record increases in owner’s equity from the sale of goods or services is

a. the revenue account.
b. the Cash account.
c. the capital account.
d. the drawing account.

a. the revenue account
A business receives a bill for utilities but decides to pay it next month. The business would record the receipt of the bill by:

a. Debiting Accounts Payable; Crediting Utilities Expense
b. Debiting Utilities Expense; Crediting Accounts Receivable
c. Debiting Utilities Expense; Crediting Accounts Payable
d. Debiting Utilities Expense; Crediting Cash

c. Debiting Utilities Expense; Crediting Accounts Payable
Which of the following is not one of the formal financial statements that is made available to all users of the financial statements.

a. Trial Balance
b. Income Statement
c. Statement of Owner’s Equity
d. Balance Sheet

a. Trial Balance
If the trial balance totals are not equal, the error may have been caused by a transposition if the difference is divisible by

a. 2
b. 7
c. 9
d. 5

c. 9
A business pays a creditor on account. The entry to record this transaction is:

a. Debit Accounts Payable; Credit Cash
b. Debit Accounts Receivable; Credit Accounts Payable
c. Debit Cash; Credit Accounts Payable
d. Debit Accounts Receivable; Credit to Cash

a. Debit Accounts Payable; Credit Cash
Identify the accounts below that would ALL appear on the balance sheet.

a. Cash, Accounts Payable, Owner’s Capital (ending balance)
b. Accounts Receivable, Accounts Payable, Fee Income
c. Utility Expense, Salary Expense, Cash
d. Owner’s Capital (beginning), Owner’s Drawing, Supplies Expense

a. Cash, Accounts Payable, Owner’s Capital (ending balance)
Which of the following accounts is NOT a nominal account?

a. Salaries Expense
b. Moriah Paige, Drawing
c. Rent Revenue
d. Office Supplies

d. Office Supplies
Which of the following would result in an error when preparing the Trial Balance?

a. Placing the Withdrawal account balance in the Debit column
b. Placing a Revenue account balance in the Credit column
c. Placing the balance in Prepaid Rent in the Credit column
d. Placing the Accounts Payable balance in the Credit column

c. Placing the balance in Prepaid Rent in the Credit column
Debits are used to record

a. increases in assets.
b. increases in revenue.
c. increases in owner’s equity.
d. increases in liabilities.

a. increases in assets.
When revenue is earned from charge-account sales, the accountant

a. debits a revenue account and credits the capital account.
b. debits Accounts Receivable and credits a revenue account.
c. debits a revenue account and credits Accounts Receivable.
d. debits Cash and credits a revenue account.

b. debits Accounts Receivable and credits a revenue account.
The ending balance of the capital account appears as a separate line item on what two statements?

a. the trial balance and the income statement
b. the statement of owner’s equity and the income statement
c. the statement of owner’s equity and the balance sheet
d. the income statement and the balance sheet

c. the statement of owner’s equity and the balance sheet
A business performed \$6,000 of services. Their customer paid \$1,000 of the amount owed right away but charged the remaining amount. To record this transaction, the business would:

a. Debit Cash \$1,000 and Debit Accounts Receivable \$5,000; Credit Fee Income \$6,000
b. Debit Accounts Receivable \$5,000 and; Credit Fee Income \$5,000
c. Debit Cash \$1,000; Credit Fee Income \$1,000
d. Debit Cash \$1,000; Credit Accounts Payable \$5,000 and Credit Fee Income \$6,000

a. Debit Cash \$1,000 and Debit Accounts Receivable \$5,000; Credit Fee Income \$6,000
Which of the following accounts is not a permanent account?

a. Cash
b. Accounts Payable
c. Salaries Expense
d. Thomas Bernard, Capital

c. Salaries Expense
The total of the figures on the left side of a Cash account is \$25,800. The total of the figures on the right side is \$14,100. The balance of this account

a. is \$11,700 and would be recorded on the right side of the account.
b. is \$39,900 and would be recorded on the left side of the account.
c. is \$39,900 and would be recorded on the right side of the account.
d. is \$11,700 and would be recorded on the left side of the account.

d. is \$11,700 and would be recorded on the left side of the account.

\$25,800 debit (left) – \$14,100 credit (right) = \$11,700 debit (left)

Which of the following would cause the Debit column and the Credit column of the Trial Balance to be unequal?

a. Placing the Fees Income balance in the Credit column
b. Placing the Prepaid Rent balance in the Credit column
c. Placing the Rent Expense balance in the Debit column
d. Placing the Office Equipment balance in the Debit column

b. Placing the Prepaid Rent balance in the Credit column
Select the entry below that records paying employees for work performed during the pay period?

a. debit Cash and credit Salary Expense
b. debit Salary Expense and credit Cash
c. debit Salary Expense and credit Accounts Receivable
d. debit Cash, and credit Accounts Receivable

b. debit Salary Expense and credit Cash
Which of the following does NOT describe a transposition?

a. It is an error.
b. It involves misplaced digits in a number.
c. It causes the difference between the debit total and the credit total to be divisible by 2.
d. It causes the trial balance to be out of balance.

c. It causes the difference between the debit total and the credit total to be divisible by 2.
The classification and normal balance of the salaries expense account is:
a. an expense with a credit balance
b. a liability with a debit balance
c. an asset with a debit balance
d. an expense with a debit balance
d. an expense with a debit balance

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