Week 3 Quiz

In a T-account, what does a debit mean?

Select one.

• An amount on the right side of the account
• An amount on the left side of the account
• An increase in the account, whatever its type
• Good news for the business that records it

Which group of accounts increases with debits?

Select one.

• Assets, expenses, and dividends
• Liabilities, common stock, and revenues
• Assets, liabilities, and revenues
• Revenues, expenses, and retained earnings

In the illustrative bicycle shop's Month 1, a cycling club pays $1,200 in advance for a season of group tune-ups the shop has not yet performed (transaction 5). Which journal entry records it?

Select one.

• Debit Cash $1,200; credit Service Revenue $1,200
• Debit Unearned Revenue $1,200; credit Cash $1,200
• Debit Cash $1,200; credit Unearned Revenue $1,200
• Debit Service Revenue $1,200; credit Cash $1,200

After the illustrative bicycle shop posts Month 1, its Cash T-account shows $35,700 on the left side and $18,600 on the right side. What is the Cash balance?

Select one.

• $35,700, a debit balance
• $17,100, a credit balance
• $54,300, a debit balance
• $17,100, a debit balance

The illustrative bicycle shop journalizes and posts all 12 of its Month 1 transactions and prepares an unadjusted trial balance. What are its column totals?

Select one.

• $33,200 in each column
• $36,800 in each column
• $36,800 of debits and $33,200 of credits
• $31,700 in each column

Which of these errors would leave a trial balance in balance? Select every one that applies.

Select every option that applies.

• Omitting a transaction from the journal entirely
• Recording the same transaction twice
• Posting an expense to the wrong expense account
• Posting only the debit half of a journal entry
• Posting a $600 debit and a $60 credit for one entry

A balanced trial balance proves that every transaction was recorded correctly.

True or false.

• True
• False

What did Luca Pacioli's Summa de arithmetica, geometria, proportioni et proportionalita, printed in Venice in 1494, contribute to accounting?

Select one.

• It contains the first published description of double-entry bookkeeping
• It shows that Pacioli invented double-entry bookkeeping for his merchants
• It set out the first generally accepted accounting principles for companies
• It made the trial balance a legal requirement for merchants in Venice

A bank reviews the illustrative bicycle shop's records before deciding whether to lend it money. What kind of user of accounting information is the bank?

Select one.

• An internal user
• A standard setter
• An external user
• A managerial accountant

One of the illustrative bicycle shop's founders pays a personal grocery bill with personal cash. What does the shop's journal record?

Select one.

• Debit Supplies and credit Cash, because groceries are supplies the shop uses
• Debit Dividends and credit Cash, because the money goes to an owner
• Debit Wages Expense and credit Cash, because the founder works there
• Nothing, because the shop is an entity separate from its owners