Question 1

Based on the chart provided, which of the following statements is TRUE regarding the normal balances of accounts in the accounting equation?

Accepted Answer

Assets have a normal debit balance, while liabilities and equity have a normal credit balance.

Question 2

If a company receives cash from a customer for services to be performed in the future, which accounts are affected and how?

Accepted Answer

Increase Cash (Asset, Debit), Increase Unearned Revenue (Liability, Credit)

Question 3

Which of the following journal entries correctly records the payment of a previously incurred expense on account?

Accepted Answer

Debit Accounts Payable, Credit Cash

Question 4

According to the chart, what is the effect of a credit entry to a liability account?

Accepted Answer

It increases the liability account.

Question 5

Which of the following transactions would require a debit to an asset account and a credit to a liability account?

Accepted Answer

Paying off a loan with cash

Question 6

If a company issues common stock for cash, which accounts are affected and how?

Accepted Answer

Debit Cash, Credit Common Stock

Question 7

Which of the following best describes the effect of a debit entry to an expense account?

Accepted Answer

It increases the expense account and decreases equity.

Question 8

A company pays a cash dividend to its shareholders. Which accounts are affected and how?

Accepted Answer

Debit Dividends, Credit Cash

Question 9

Which of the following transactions would result in a credit to an asset account?

Accepted Answer

Paying cash for supplies

Question 10

If a company records a debit to Accounts Receivable and a credit to Sales Revenue, what type of transaction has occurred?

Accepted Answer

A sale on account

Comprehensive Study Notes for Financial Accounting: ACCT 2301 Final Exam Review

Study Guide - Practice Questions