ࡱ> FHEM Ebjbj== !6WW!!l***>8T>,H::(bbbiiig,i,i,i,i,i,i,$0. P0n,*iiii,bbA,i8b*bg,ig,: &C**C+b. A,#>P+C+$,0,)+0)^0C+>>Chapter 3, TEST 3B Name _________________________ Date _________________________ SCORING RECORD SectionTotal Possible DeductionsStudent ScoreA30B30C10D30Total100 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 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. _____ _____ The difference between the debit side and the credit side of an account is called the footing. _____ _____ The owner's investment is recorded as a credit in the owner's drawing account. _____ _____ Liability accounts normally have debit balances. _____ _____ 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. _____ _____ Lillian withdrew $300 for personal use. This this decreases cash and decreases owner's equity. _____ _____ Expenses should be recorded on the credit side of the owner's capital account. _____ _____ Prepaid insurance is an asset account. _____ _____ For each business transaction, you can only have one debit and one credit. _____ _____ A trial balance is often used when preparing financial statements. _____ _____ A trial balance is used to prove that assets equal liabilities. _____ _____ 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 A credit: (A) decreases cash; (B) decreases revenues; (C) decreases owners equity; (D) increases expenses; (E) decreases liabilities. _____ _____ 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. _____ _____ A debit: (A) is on the right; (B) is on the left; (C) decreases assets; (D) increases liabilities; (E) increases owner's equity. _____ _____ 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. _____ _____ Examples of expenses are: (A) wages; (B) rent; (C) advertising; (D) utilities; (E) all of these. _____ _____ 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. _____ _____ 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 _____ _____ 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. _____ _____ A purchase of equipment on account: (A) decreases cash; (B) increases an asset; (C) decreases owner's equity; (D) decreases expenses; (E) decreases revenue. _____ _____ 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) Prepaid Insurance ________________ Accounts Payable ________________ Owner's Drawing ________________ Equipment ________________ Accounts Receivable ________________ Supplies ________________ Cash ________________ Owner's Capital ________________ Rent Expense ________________ Notes Payable ________________ Section D Directions: Damien Carter has started his own employment agency. During the first month, the following transactions occurred. Damien invested $20,000 cash in the business. A new computer and printer were purchased with cash for $3,000. 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. 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