QUIZ #2

1. The drawings account decreases owner's equity and is an income statement

account.
O A. True
C B. False

2. When revenues are earned, owner's equity is increased.

C A. True
O B. False

3. The second step in the recording process is to enter the transaction information
in a journal.
C A. True
O B. False

4. The entire group of accounts maintained by a company is referred to as the

ledger.
C A. True
O B. False

5. A trial balance is prepared at the end of an accounting period and is useful in the
preparation of financial statements.
C A. True
O B. False

6. A credit to a liability account indicates:

O A. a debit was made to an asset account.
O B. a decrease in the liability.
C C. an increase in the liability.
O D. an error.

7. A debit is not the normal balance for which of the following?

O A. Asset account.
O B. Drawing account.
O C. Expense account.
C D. Capital account.

8. An account will have a debit balance if the:

O A. number of debits exceeds the number of credits.
O B. first transaction posted was a debit.
C C. total of the debit amounts exceeds the total of the credit amounts.
O D. last transaction posted was a debit.
9. Which of the following statements is false?
O A. Revenues increase owner's equity.
O B. Revenues have normal credit balances.
O C. Revenues are a positive factor in the computation of net income.
C D. Revenues are increased by debits.

10. A credit to a revenue account:

C A. indicates an increase in revenues earned.
O B. indicates a decrease in revenues earned.
O C. must be accompanied by a debit to an expense account.
O D. is an error.

11. Entering transaction data in the journal is known as:

O A. posting.
C B. journalizing.
O C. balancing.
O D. recording.

12. The first step in the recording process is to:

O A. enter the transaction in a journal.
O B. transfer journal information to ledger accounts.
O C. prepare the trial balance.
C D. analyse each transaction.

13. A list of accounts and their balances at a specific time is called a:

O A. chart of accounts.
O B. general journal.
O C. general ledger.
C D. trial balance.

14. Which of the following is incorrect regarding a trial balance?

O A. It proves the mathematical equality of debits and credits after posting.
C B. It proves that all transactions have been recorded.
O C. A trial balance uncovers errors in journalizing and posting.
O D. A trial balance is useful in the preparation of financial statements.

15. Dollar signs are usually used only in the:

O A. journals.
O B. ledgers.
O C. financial statements.
C D. financial statements and trial balance.

16. A complete journal entry includes all of the following except:

O A. the date of the transaction.
O B. a brief explanation of the transaction.
C C. the balance of the accounts in the entry.
O D. the accounts and amounts to be debited and credited.

17. The primary purpose of a trial balance is to:

O A. prove that all transactions have been recorded.
C B. prove that the debits equal the credits after posting.
O C. uncover errors in journalizing and posting.
O D. determine the net income for the year.

18. Which of the following is false about a journal?

O A. It discloses the complete effect of a transaction.
O B. It provides a chronological record of transactions.
O C. It helps to prevent errors because debit and credit amounts for each entry can
be readily compared.
C D. It keeps in one place all the information about changes in specific
account balances.

19. Posting of journal entries should be done in:

O A. account number order.
O B. alphabetical order.
C C. chronological order.
O D. dollar amount order.

20. The Unearned Revenue account is a (an):

O A. asset.
C B. liability.
O C. revenue.
O D. expense.