2.1   Learning Objective 2-1

 

1) A chart of accounts:

A) is set up in alphabetical order.

B) includes account balances.

C) is a listing of all the accounts used by a company.

D) All of the above are correct.

 

2) Accounts Payable had a normal starting balance of $800. There were debit postings of $600 and credit postings of $300 during the month. The ending balance is:

A) $500 credit.

B) $1,000 debit.

C) $500 debit.

D) $1,000 credit.

 

3) The beginning balance in the Computers account was $2,000. The company purchased an additional $1000 worth of computers. The balance in the account is:

A) debit of $2,000.

B) credit of $3,000.

C) debit of $3,000.

D) credit of $2,000.

 

4) Accounts receivable increases on the debit side of the account.

 

5) Revenues are recorded when earned.

6) Selected accounts from the ledger of Thomas Company appear below. For each account, indicate the following:

a. In the first column at right, indicate the type of each account using the following abbreviations:

Asset – ARevenue – RNone of the above – NLiability – LExpense – E

b. In the second column, indicate the normal balance of the account by inserting a Dr. or Cr.

 

Account

Type of Account

Normal Balance

1. Office Supplies

______

______

2. Accounts Receivable

______

______

3. Fees Earned

______

______

4. Thomas, Withdrawals

______

______

5. Accounts Payable

______

______

6. Salaries Expense

______

______

7. Thomas, Capital

______

______

8. Accounts Receivable

______

______

9. Equipment

______

______

10. Telephone Expense

______

______

 

 

7) Explain the difference between expenses and withdrawals.

8) Why is Revenue increased on the Credit side? (Explain as it pertains to the expanded accounting equation and its relationship to Owner’s Equity.)

 

 

 

 



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