财务会计题库-Transaction-Analysis.doc

Financial Accounting, 7e
Harrison/Horngren
Test Item File
CHAPTER 2: TRANSACTION ANALYSIS

2.1-1 A journal entry is an event that has a financial impact on the business that can be reliably measured.

Answer: False LO: 2-1 Diff: 2 EOC: S2-5
2.1-2 The trial balance is a NOT a formal accounting statement.

Answer: True LO: 2-1 Diff: 1 EOC: S2-25
2.1-3 Accrued Liabilities is a liability account.

Answer: True LO: 2-1 Diff: 1 EOC: E2-28
2.1-4 The retained earnings account represents the excess of net income over dividends retained in the business since its inception.

Answer: True LO: 2-1 Diff: 1 EOC: P2-50A
2.1-5 Expense accounts always represent expired assets.

Answer: False LO: 2-1 Diff: 2 EOC: E2-11
2.1-6 The dividends account indicates an increase in common stock.

Answer: False LO: 2-1 Diff: 2 EOC: E2-15
2.1-7 Double-entry accounting records only those transactions affecting the income statement.

Answer: False LO: 2-1 Diff: 2 EOC: QC 8
2.1-8 The purchase of office equipment for cash would increase both an asset and a liability account.

Answer: False LO: 2-1 Diff: 2 EOC: P2-49A
2.1-9 Which of the following is NOT an asset account?

A. Accounts Receivable
B. Prepaid Rent
C. Common Stock
D. All of these are asset accounts.
Answer: C LO: 2-1 Diff: 2 EOC: P2-49A
2.1-10 Prepaid expense accounts appear on:
A. the income statement.
B. the balance sheet.
C. the statement of retained earnings and on the income statement.
D. both the income statement and balance sheet.
Answer: B LO: 2-1 Diff: 2 EOC: P2-56A
2.1-11 The term "double-entry accounting" indicates that the accountant:
A. records both sides of each transaction in the accounts affected.
B. computes the income statement and balance sheet effect of each transaction.
C. identifies both the cash inflows and the cash outflows.
D. uses both the general journal and the general ledger when recording transactions.
Answer: A LO: 2-1 Diff: 2 EOC: QC 8
2.1-12 A company received cash in exchange for issuing stock. This transaction increased assets and:
a. increased expenses.
b. increased revenues.
c. increased liabilities.
d. increased equity.
Answer: D LO: 2-1 Diff: 1 EOC: E2-16
2.1-13 A company purchased office supplies for cash. This transaction increased assets and:
A. increased equity.
B. increased liabilities.
C. increased revenues.
D. decreased assets.
Answer: D LO: 2-1 Diff: 1 EOC: QC 10
2.1-14 A company performed services for a customer on account. This transaction increased assets and:
A. decreased equity.
B. increased liabilities.
C. increased expenses.
D. increased revenues.
Answer: D LO: 2-1 Diff: 1 EOC: QC 3
2.1-15 A company paid cash for employee wages. This transaction:
A. increased cash and increased expenses.
B. increased cash and decreased expenses.
C. decreased cash and increased expenses.
D. decreased cash and decreased revenues.
Answer: C LO: 2-1 Diff: 1 EOC: S2-5
2.1-16 A company paid cash for an amount owed to a creditor. This transaction decreased cash and:
A. decreased revenues.
B. decreased liabilities.
C. decreased expenses.
D. increased expenses.
Answer: B LO: 2-1 Diff: 1 EOC: E2-16
2.1-17 The owner of a business paid cash from his personal checking account to purchase an automobile for his personal use. This transaction:
A. increased a liability account and increased liabilities.
B. decreased cash and increased expenses.
C. increased assets and increased owners’ equity.
D. is not a transaction recognized by the business.
Answer: D LO: 2-1 Diff: 2 EOC: E2-15
2.1-18 Which type of account is increased when a company records a debt?
A. Expense
B. Retained earnings
C. Liability
D. None of the above are correct.
Answer: C LO: 2-1 Diff: 2 EOC: QC 1
2.1-19 All of the following accounts would be considered assets EXCEPT for:
A. cash.
B. retained earnings.
C. prepaid expenses.
D. notes receivable.
Answer: B LO: 2-1 Diff: 1 EOC: S2-9
2.1-20 What type of account is prepaid insurance?
A. A liability
B. An expense
C. Stockholders’ equity
D. An asset
Answer: D LO: 2-1 Diff: 2 EOC: P2-49A
2.1-21 Which of the following accounts are a standard component of stockholders’ equity?
A. Prepaid Expenses
B. Dividends
C. Additional Paid In Stock
D. Unearned Income
Answer: B LO: 2-1 Diff: 2 EOC: P2-50A
2.1-22 Notes payable, accounts payable, taxes payable and salaries payable are all examples of:
A. liabilities.
B. revenues.
C. expenses.
D. assets.
Answer: A LO: 2-1 Diff: 1 EOC: S2-9
2.1-23 Which type of account is decreased when a company pays its employees with cash?
A. A liability
B. A prepaid asset
C. An asset
D. Owners’ equity
Answer: C LO: 2-1 Diff: 2 EOC: S2-5
2.1-24 Which of the following business events would NOT be recorded in a company’s accounting records?
A. The company paid a monthly utility bill of $1,000.
B. The company issued 100 shares of common stock for $75,000.
C. The company purchased two acres of land for future plant expansion for $600,000.
D. The company signed a contract to provide services in the next accounting period for $125,000.
Answer: D LO: 2-1 Diff: 2 EOC: P2-52A
2.1-25 Which of the following transactions would increase total assets?
I. Borrowed cash on a note payable, $80,000
II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200
A. I and II
B. I and III
C. I, II, and III
D. All of these answers are correct.
Answer: A LO: 2-1 Diff: 3 EOC: E2-16
2.1-26 Consider the following transactions:
I. Borrowed cash on a note payable, $80,000
II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200
Total assets would be:
A. $96,800.
B. $88,000.
C. $90,000.
D. $98,000.
Answer: C LO: 2-1 Diff: 3 EOC: E2-16

2.1-27 The payment of an amount owed to a creditor would:
A. decrease assets.
B. increase net income.
C. decrease liabilities.
D. both decrease assets and decrease liabilities.
Answer: D LO: 2-1 Diff: 2 EOC: E2-15
2.1-28 The payment of salaries to employees would:
A. increase assets and increase liabilities.
B. decrease net income and decrease assets.
C. increase liabilities and increase net income.
D. decrease assets and decrease liabilities.
Answer: B LO: 2-1 Diff: 2 EOC: S2-5
2.1-29 When a company performs a service and immediately collects the cash from the customer, which of the following would occur?
A. Stockholders’ equity would decrease.
B. Assets would decrease.
C. Expenses would decrease.
D. Net income would increase.
Answer: D LO: 2-1 Diff: 2 EOC: QC 3
2.1-30 Purchasing supplies on account would:
A. increase total assets and decrease total liabilities.
B. increase total liabilities and decrease total assets.
C. increase total assets and increase total liabilities.
D. increase total liabilities and increase stockholders’ equity.
Answer: C LO: 2-1 Diff: 2 EOC: E2-14

2.1-31 Paying a utility bill as soon as it was received would:
A. increase expenses.
B. increase liabilities.
C. increase owners’ equity.
D. decrease revenues.
Answer: A LO: 2-1 Diff: 2 EOC: E2-16
2.1-32 Borrowing money from the bank by signing a note payable would:
A. increase stockholders’ equity.
B. have no effect on stockholders’ equity.
C. decrease liabilities.
D. increase net income.
Answer: B LO: 2-1 Diff: 2 EOC: E2-15
2.1-33 Receiving a payment from a customer on account would:
A. increase stockholders’ equity.
B. have no effect on total assets.
C. increase stockholders’ equity.
D. decrease liabilities.
Answer: B LO: 2-1 Diff: 2 EOC: E2-15
2.1-34 The purchase of land for cash would:
A. increase total assets.
B. decrease stockholders’ equity.
C. increase the total debits on the trial balance.
D. have no effect on total assets.
Answer: D LO: 2-1 Diff: 3 EOC: E2-15

2.1-35 If a person starting a business had an investment of a building, valued at $300,000 with an $180,000 outstanding mortgage, the effect would be to:
A. increase assets by $120,000.
B. increase assets by $180,000.
C. increase stockholders’ equity by $120,000.
D. increase stockholders’ equity by $300,000.
Answer: C LO: 2-1 Diff: 3 EOC: E2-14
2.1-36 Performing services on account would:
A. decrease both assets and liabilities.
B. increase assets and decrease stockholders’ equity.
C. decrease revenue and decrease stockholders’ equity.
D. increase net income and stockholders’ equity.
Answer: D LO: 2-1 Diff: 3 EOC: E2-16
2.1-37 The collection of cash from a cash sale would:
A. increase assets and stockholders’ equity.
B. increase assets and decrease liabilities.
C. decrease assets and increase net income.
D. have no effect on net income or stockholders’ equity.
Answer: A LO: 2-1 Diff: 3 EOC: E2-16
2.1-38 Cash dividends paid to the stockholders will:
A. increase assets and decrease liabilities.
B. increase assets and increase liabilities.
C. have no effect on stockholders’ equity or revenue.
D. decrease assets and decrease stockholders’ equity.
Answer: D LO: 2-1 Diff: 3 EOC: E2-15
2.1-39 Consider the following transactions:
I. Borrowed cash on a note payable, $80,000
II. Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200
Total liabilities would be:
A. $1,200.
B. $81,200.
C. $98,000.
D. $80,000.
Answer: B LO: 2-1 Diff: 3 EOC: S2-2
2.1-40 Consider the following transactions:
I. Owners invested $8,000 cash to begin the business
II. Provided services for cash, $6,000
III. Provided services on account, $4,000
IV. Paid cash for expenses, $7,500
How much cash does the business have?
A. $ 2,500
B. $ 4,500
C. $ 6,500
D. $10,500
Answer: C LO: 2-1 Diff: 2 EOC: S2-3

2.1-41 Consider the following transactions:
I. Owners invested $8,000 cash to begin the business
II. Provided services for cash, $6,000
III. Provided services on account, $4,000
IV. Paid cash for expenses, $7,500
How much net income did the business have?
A. $2,500
B. $3,000
C. $4,000
D. $6,000
Answer: A LO: 2-1 Diff: 2 EOC: E2-16
2.2-1 An account with a normal balance of a debit indicates that the account is a liability account.

Answer: False LO: 2-2 Diff: 1 EOC: S2-9
2.2-2 An account with a normal credit balance is most often a liability or stockholders’ equity account.

Answer: True LO: 2-2 Diff: 1 EOC: QC 2
2.2-3 Liabilities and revenues are decreased by credits.

Answer: False LO: 2-2 Diff: 2 EOC: P2-51A
2.2-4 Assets, owners’ equity and dividends are all increased by debits.

Answer: False LO: 2-2 Diff: 2 EOC: E2-17
2.2-5 Revenues and expenses are specialized owners’ equity accounts, all having debit balances.

Answer: False LO: 2-2 Diff: 1 EOC: E2-21
2.2-6 Dividends and expenses are specialized owners’ equity accounts that are increased by debits.

Answer: True LO: 2-2 Diff: 2 EOC: E2-17
2.2-7 Every business transaction involves at least one debit and one credit part of the transaction.

Answer: True LO: 2-2 Diff: 2 EOC: S2-5
2.2-8 All business transactions involve an increase in at least one account and a decrease in at least one other account.

Answer: False LO: 2-2 Diff: 2 EOC: S2-5.
2.2-9 The left side of a T-account is always the:
A. increase side.
B. decrease side.
C. debit side.
D. credit side.
Answer: C LO: 2-2 Diff: 1 EOC: S2-7
2.2-10 Which of the following statements regarding accounts is TRUE?
A. An asset is increased by a debit and decreased by a credit.
B. Dividends are decreased by debits and increased by credits.
C. A liability is increased by a debit and decreased by a credit.
D. Revenue is increased by a debit; an expense is increased by a credit.
Answer: A LO: 2-2 Diff: 3 EOC: QC 1
2.2-11 Which accounts are increased by debits?
A. Assets and owners’ equity
B. Expenses and owners’ equity
C. Assets, expenses and dividends
D. Assets, expenses and owners’ equity
Answer: C LO: 2-2 Diff: 2 EOC: E2-23
2.2-12 An account is increased by a debit and has a normal balance of a debit. This account is a(n)
A. expense account.
B. liability account.
C. asset account.
D. both an expense account and an asset account.
Answer: D LO: 2-2 Diff: 3 EOC: E2-25
2.2-13 A business purchases a truck by signing a note payable to the seller. This transaction would include a:
A. credit to Truck.
B. debit to Note Payable.
C. credit to Note Payable.
D. debit to Prepaid Maintenance.
Answer: C LO: 2-2 Diff: 2 EOC: P2-53A
2.2-14 The accounting transaction to record a loan would include a credit to:
A. Cash.
B. Notes Payable.
C. Utilities Expense.
D. Accounts Receivable.
Answer: B LO: 2-2 Diff: 2 EOC: P2-53A
2.2-15 The entry to record $1,000 received from a customer for services previously rendered would be:
Cash
1,000
Accounts Receivable
1,000
A.

Cash
1,000
Service Revenue
1,000
B.

Service Revenue
1,000
Accounts Receivable
1,000
C.

Dividends
1,000
Cash
1,000
D.

Answer: A LO: 2-2 Diff: 2 EOC: P2-53A
2.3-1 Debits are always recorded (journalized) before credits.

Answer: True LO: 2-3 Diff: 2 EOC: S2-5
2.3-2 A journal shows a chronological listing of the accounting activities of a business—because business transactions occur in this manner.

Answer: True LO: 2-3 Diff: 1 EOC: P2-51A
2.3-3 Posting accounting transactions avoids the necessity of journalizing transactions, and the use of T- accounts.

Answer: False LO: 2-3 Diff: 1 EOC: QC 11
2.3-4 The ledger provides a good indication of how much cash is available for the business to use at any one point in time.

Answer: True LO: 2-3 Diff: 2 EOC: S2-12
2.3-5 The accounting records are considered to be correct if the total debits of the trial balance equal the total credits on the Post Closing Trial Balance.

Answer: False LO: 2-3 Diff: 2 EOC: E2-22
2.3-6 A trial balance is a list of all accounts and their balances for a period of time.

Answer: False LO: 2-4 Diff: 1 EOC: P2-49A
2.3-7 A trial balance is an optional financial statement that reports the financial position of the company as of a given day in time.

Answer: False LO: 2-4 Diff: 2 EOC: E2-21
2.3-8 Accounting transactions are initially recorded in the:
A. T-account.
B. ledger.
C. journal.
D. poster.
Answer: C LO: 2-3 Diff: 2 EOC: QC 11
2.3-9 A chronological record (or history) of an entity’s transactions is called a:
A. T-account.
B. ledger.
C. journal.
D. poster.
Answer: C LO: 2-3 Diff: 1 EOC: E2-18
2.3-10 What is one of the first steps in the journalizing proce