Chapter 3, TEST 1B
Chapter 3, TEST 3B
Name _________________________
Date _________________________
SCORING RECORD
| |Total Possible | |Student |
|Section | |Deductions |Score |
|A |30 | | |
|B |30 | | |
|C |10 | | |
|D |30 | | |
|Total |100 | | |
Section A
DIRECTIONS: Each of the following statements is true or false. Indicate your choice by writing in the Answers column T for a true answer or F for a false answer. (2 points for each correct answer)
For
Answers Scoring
1. A T account is used to keep track of
the increases or decreases in the individual
assets, liabilities, owner's equity, revenues, and
expenses of a business entity. _____ _____
2. The difference between the debit side and the
credit side of an account is called the footing. _____ _____
3. The owner's investment is recorded as a credit in
the owner's drawing account. _____ _____
4. Liability accounts normally have debit balances. _____ _____
5. If Tracy received $2,000 in cash and $1,000 on
account from customers for services rendered during
the month, the accounts receivable would be credited
for $3,000. _____ _____
6. Lillian withdrew $300 for personal use. This
this decreases cash and decreases owner's equity. _____ _____
7. Expenses should be recorded on the credit side of the
owner's capital account. _____ _____
8. Prepaid insurance is an asset account. _____ _____
9. For each business transaction, you can only have
one debit and one credit. _____ _____
10. A trial balance is often used when preparing
financial statements. _____ _____
11. A trial balance is used to prove that assets equal
liabilities. _____ _____
12. Debit means left and increase. Credit means right
and decrease. _____ _____
13. When computers are purchased, an expense account is
debited for the amount of the purchase. _____ _____
14. A T account is a useful tool for accounting. _____ _____
15. To credit an account is to enter an amount on
the right side of the T account. _____ _____
Section B
Directions: Complete each of the following statements by writing in the Answers column the letter of the word or words that correctly completes each statement. (3 points each)
For
Answers Scoring
1. A credit:
(A) decreases cash; (B) decreases revenues;
(C) decreases owner’s equity; (D) increases
expenses; (E) decreases liabilities. _____ _____
2. The amount of difference between the total
debits and the total credits to an account
is called a : (A) ruling; (B) footing; (C)
trial balance (D) balance; (E) none of these. _____ _____
3. A debit: (A) is on the right; (B) is on the
left; (C) decreases assets; (D) increases
liabilities; (E) increases owner's equity. _____ _____
4. The normal balance is a credit in: (A) a
asset account; (B) an owner's equity
account; (C) an expense account; (D)a drawing
account; (E) none of these. _____ _____
5. Examples of expenses are: (A) wages; (B)
rent; (C) advertising; (D) utilities; (E)
all of these. _____ _____
6. The capital account: (A) decreases with
increased revenues; (B) decreases with an
investment; (C)decreases with increased
expenses; (D) has a normal debit balance;
(E) always has a balance equal to the cash
account. _____ _____
7. Emily pays her telephone bill for the month.
The transaction: (A) decreases the owner's
equity; (B) would be a debit to the cash
account; (C) decreases a liability account;
(D) decreases expenses; (E) decreases two
asset accounts _____ _____
8. The trial balance should: (A) only be done
if you think there is a problem; (B)lists all
of the accounts for the business even if
they do not have a balance; (C) be submitted
to the owner as a formal report for the
business; (D) always balance; (E) all
of these. _____ _____
9. A purchase of equipment on account: (A)
decreases cash; (B) increases an asset; (C)
decreases owner's equity; (D) decreases
expenses; (E) decreases revenue. _____ _____
10. The fact that each transaction has a dual
effect on the accounting elements provides the
basis for what is called: (A) single-entry
accounting; (B) compound-entry accounting; (C)
multiple-entry accounting; (D) double-entry
accounting; (E) duplicate-entry accounting. _____ _____
Section C
Directions: Indicate the normal balance (debit or credit) for each of the following accounts. (1 point each)
1. Prepaid Insurance ________________
2. Accounts Payable ________________
3. Owner's Drawing ________________
4. Equipment ________________
5. Accounts Receivable ________________
6. Supplies ________________
7. Cash ________________
8. Owner's Capital ________________
9. Rent Expense ________________
10. Notes Payable ________________
Section D
Directions: Damien Carter has started his own employment
agency. During the first month, the following transactions occurred.
a) Damien invested $20,000 cash in the business.
b) A new computer and printer were purchased with cash for $3,000.
c) Damien purchased office supplies of $1,200 on account from Office Supply, Inc.
(d) Damien paid a telephone bill for the first month, $100.
(e) A $500 payment was made to Office Supply, Inc. on account.
Record the above transactions in the T accounts provided below. Foot and balance the accounts. Prove Debits equal Credits.(30 points total)
CASH ACCOUNTS PAYABLE D.CARTER, CAPITAL
SUPPLIES TELEPHONE EXPENSE
COMPUTER EQUIPMENT
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