Final Review 4 Question Preview (ID: 19185)


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The payment of a liability is recorded by a debit to the liability account and a credit to the owner's capital account.
a) True
b) False
c)
d)

If Paul Abdou deposits $30,000 in a checking account in the name of his business, the two accounts affected are ____.
a) Cash in Bank and Computer Equipment
b) Cash in Bank and Accounts Receivable
c) Cash in Bank and Paul Abdou, Capital
d) Cash in Bank and Accounts Payable

Which of the following accounts is not closed at the end of the accounting period?
a) Fees
b) Income Summary
c) Maintenance Expense
d) Klaus Braun, Capital

Transferring the expense account balances to the Income Summary account is the ____.
a) The Income Summary account is located in the owner's equity section of the general ledger.
b) The Income Summary account has a normal debit balance.
c) The Income Summary account is a permanent account.
d) The Income Summary account is used throughout the accounting period.

A business groups its accounts in a ledger
a) True
b) False
c)
d)

A business transaction can affect two accounts on the same side of the accounting equation and still leave the equation in balance.
a) True
b) False
c)
d)

To record transactions in chronological order means to record them according to the date on which they occurred.
a) True
b) False
c)
d)

A chart of accounts is limited to 50 accounts.
a) True
b) False
c)
d)

The difference between the debit and credit amounts in an account is the account balance.
a) True
b) False
c)
d)

Liability, expense, and capital accounts all have normal credit balances.
a) True
b) False
c)
d)

Expenses decrease owner’s equity and are recorded as debits.
a) True
b) False
c)
d)

The rules of debit and credit for expense accounts are the same as the rules for asset accounts.
a) True
b) False
c)
d)

The withdrawal of cash by the owner of a business decreases owner's equity.
a) True
b) False
c)
d)

Temporary capital accounts are extensions of the owner's capital account.
a) True
b) False
c)
d)

Permanent accounts start each accounting period with a zero balance.
a) True
b) False
c)
d)

Revenues increase owner's equity, and increases in revenues are recorded as debits.
a) True
b) False
c)
d)

The total of all accounts with normal debit balances should equal the total of all accounts with normal credit balances if the rules of debit and credit were followed correctly.
a) True
b) False
c)
d)

Income from Fees is a permanent account.
a) True
b) False
c)
d)

A fiscal period may be one month, three months, six months, or even one year, but usually it is one year.
a) True
b) False
c)
d)

An accounting period that begins on July 1 and ends on June 30 is a calendar-year accounting period.
a) True
b) False
c)
d)

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