Accounting Quizzes and Practice Tests

B. Increases in expenses are recorded with a debit. The expense is either paid for, a credit to cash, or is owed, a credit to a liability. C. You can not increase a liability and decrease an asset. This is two credits and the journal entry will not balance.

Income Statement

Using inventory is recorded as the credit (decreasing) and cost of goods sold is recorded with a debit (expense increasing). A. Cash is used when something is received from earning revenues and when how to value noncash charitable contributions assets are paid for or liabilities are reduced. Cash is used when you see the word “paid” or “received” or Mcollected’. Accounts receivable and inventory are used primarily in two situations.

Account Balances and Calculations

(d.) occurs when cash is borrowed or an asset is purchased on credit. C. Truck increases and cash decreases. The truck increases with a debit and the cash decreases with a credit. The purpose of journal entries is to keep a day-to-day, chronological record of a business and its transactions. The balance in your T accounts will be the amounts reported on the balance sheet for each account. B. A debit to investments is an increase in investments.

Try Another Double Entry Bookkeeping Quiz

• The truck increases with a debit and the cash decreases with a credit.
• Check out the section just below for a summary of the most common journals, including links to each of the individual lessons…
• B. Owing a supplier is called accounts payable.
• Assets increase with a debit and decrease with a credit.

Accounts receivable decreases with a credit. Assets increase with a debit and decrease with a credit. (a.) will not occur since a company does not get cash from a supplier. (b.) will not occur because cash does not decrease when the customer owes for goods/services. You will never have two debits in a journal entry without a credit. All journal entries require at least one debit and one credit.

Identify the item that would cause the trial balance to not balance.

D. Issuing stock to investors increases cash, recorded with a debit, and increases common stock, recorded with a credit. A. Paying for an amount owed is a decrease to cash and a decrease to the liability. Assets are decreased with a credit and liabilities are decreased with a debit. The expense was recorded last period with a debit when the service was provided. In this transaction we have an expense but we don’t pay it straight away.

Ace your exams with our all-in-one platform for creating and sharing quizzes and tests. Well, there’s actually seven different « books » – seven different journals. Before you start, I would recommend to time yourself to make sure that you not only get the questions right but are completing them at the right speed. For example, a journal can be matched to the relevant source document (such as a check stub or a receipt).

The company now owes more and the liability notes payable increases with a credit. Test your knowledge of general journal entries with this quiz that covers various scenarios such as expenses, income, and asset transactions. Each question will challenge your understanding of accounting principles and the correct recording methods for different business activities. Received $150,000 cash from investors for ownership in the company.b.

To keep the journal entry in balance you must also use a debit. Revenues are provided in exchange for an asset. A debit to an asset records the increase in the asset received. The current year net income might be in the temporary revenue and expense accounts and the current year draws might be in the drawing account.