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

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Question 41

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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.

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Question 42

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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.

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Question 43

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The debit side of all accounts decreases the balance and the credit side increases all accounts.

A formal account that has columns for date,explanation,post reference,debit,and credit is called the:

Extreme Home bought painting equipment on account for $2,100.The entry would include:

The chart of accounts:

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, and in Column 3 the financial statement that the account appears upon - $\begin{array} { | l | l | l | l | } \hline & \text { Column } 1 & \text { Column } 2 & \text { Column } 3 \\\hline \text { Postage Expense } & & & \\\hline\end{array}$

Given the following list of accounts with normal balances,what are the trial balance totals of the debits and credits? $\begin{array} {| l | r| } \hline \text { Cash } & \$ 1,100 \\\hline \text { Accounts Receivable } & 800 \\\hline \text { Capital } & 1,900 \\\hline \text { Withdrawals } & 500 \\\hline \text { Service Fees } & 1,000 \\\hline \text { Rent Expense } & 500 \\\hline\end{array}$

___ 4.Legal Fees

Equipment is an example of a liability.

What would be the effect on accounts if the owner withdrew cash?

Withdrawals and expenses are reported on the income statement.

Carrie flew to San Francisco on a business trip.The purchase price of the ticket was $422 and it was bought on account.The entry to record the transaction is:

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, and in Column 3 the financial statement that the account appears upon. - $\begin{array} { | l | l | l | l | } \hline & \text { Column } 1 & \text { Column } 2 & \text { Column } 3 \\\hline \text { Cleaning Fees Earned } & & & \\\hline\end{array}$

Wages Expense appears on the balance sheet.

Given the following list of accounts with normal balances,what are the trial balance totals of the debits and credits? $\begin{array} {| l | r |} \hline \text { Cash } & \$ 1000 \\\hline \text { Equipment } & 500 \\\hline \text { Accounts Payable } & 350 \\\hline \text { Capital } & 900 \\\hline \text { Service Fees } & 1000 \\\hline \text { Salaries Expense } & 750 \\\hline\end{array}$

Accounts Receivable indicates amounts owed to us by our clients or customers.

Which of the following entries would be used to record the billing of fees earned?

An account that would be increased by a debit is:

A chart of accounts is below.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. $\begin{array}{c}\begin{array}{lll}\text { 111 Cash}\\\text { 112 Accounts Receivable}\\\text { 121 Delivery Equipment}\\\text { 211 Accounts Payable}\\\text { 311 C. Webster, Capital}\\\end{array}\begin{array}{lll}\text { 312 C. Webster, Withdrawals}\\\text { 411 Delivery Fees Earned}\\\text { 511 Salaries Expense}\\\text { 512 Rent Expense}\\\text { 513 Advertising Expense}\\\text { 514 Gas Expense}\end{array}\end{array}$ $\begin{array}{lll} \text { Debit}& \text { Credit}& \text { Transaction } \\\underline{\quad\quad}&\underline{\quad\quad}& \text { 1. Invested cash in the business. } \\\underline{\quad\quad}&\underline{\quad\quad}& \text { 2. Received cash for delivery services performed. } \\\underline{\quad\quad}&\underline{\quad\quad}& \text { 3. Billed a customer for services performed.}\\\underline{\quad\quad}&\underline{\quad\quad}& \text {4. Paid accounts payable. } \\\underline{\quad\quad}&\underline{\quad\quad}& \text {5. Collected accounts receivable. } \\\underline{\quad\quad}&\underline{\quad\quad}& \text { 6. Withdrew cash for personal use.}\\\underline{\quad\quad}&\underline{\quad\quad}& \text { 7. Paid advertising expense} \\ \underline{\quad\quad}&\underline{\quad\quad}&\text { 8. Paid rentexpense for the month. } \\\underline{\quad\quad}&\underline{\quad\quad}& \text { 9. Purchased delivery equipment on account. } \\\underline{\quad\quad}&\underline{\quad\quad}& \text { 10. Paid salaries for the week. } \\\end{array}$