Question: Answered
Which of the following accounts are debited to record increase in balances?
a. Assets and Liabilities
b. Expenses and Liabilities
Get Your Accounting Homework Done By An Expert Tutor.
Our finest talent is ready to start your order. Order Today And Get 20% OFF!
Hire An Expert Tutor Nowc. Assets and Expenses
d. Drawing and Liabilities
Answer Explanation: Debit balance accounts are increased only when the same accounts are debited. Therefore, assets and expenses accounts are debited to record increase in balances. Hence, c is correct. Credit balance accounts are in remaining options. Hence, options a, b, and d are incorrect.
Other Multiple Choice Answers Explanation
a) Assets are typically debited since an increase in assets is generally accompanied by a debit account. On the other hand, liabilities are typically credited since the credit balances are generally increased with a credit entry.
b) Expenses are typically recoded as debit since they record an increase in balance. Liabilities, on the opposite are typically credited since the credit balances are generally increased with a credit entry.
d) Drawings are debited since they represent a contra equity account, thus it is reported as a reduction from the total shareholder capital in the firm. Liabilities, on the other hand are typically credited since the credit balances are generally increased with a credit entry.
MORE QUESTIONS;
1. Which of the following entries records the payment of an account payable?
A. debit Cash; credit Accounts Payable
B. debit Cash; credit Supplies Expense
C. debit Accounts Payable; credit Cash
D. debit Accounts Receivable; credit Cash
Answer: (D)
Explanation: To record the payment of an accounts payable, debit accounts I. able to decrease
Accounts payable balance and credit cash as it goes out. Therefore, d is correct. According to above explanation, options a, b, and c are incorrect.
2. Which of the following is not a correct rule of debits and credits?
a. Liabilities, revenues and owner’s equity are increased by credits.
b. The normal balance for revenues and expenses is a credit.
c. Assets, expenses and withdrawals are increased by debits.
Answer: (B)
Exlantion: Debit balance accounts are only increased when the similar accounts are debited. In a similar manner, credit balance accounts are only increased when the similar accounts are credited. Hence the correct answer is option b.
3. The process of transferring the journal entries to the accounts is known as
A. summarizing.
B. updating.
C. posting.
D. journalizing.
Answer: (C)
Explantion: Posting is typically done to generate a trial balance utilized to construct the balance sheet, income statements and other financial statements.
4. A trial balance is prepared to?
A. summarize the account balances to help prepare financial statements.
B. prove that each account balance is correct.
C. prove that there were no errors made in recording transactions into the journal.
D. prove that no errors were made in posting to the ledger.
Answer: (A)
Explantion: A trial balance is prepared to make sure that all entries generated into the general ledger of the firm are appropriately balanced. It records the ending balance in every general ledger account.
5. The revenue recognition concept
A. states that revenue is not recorded until the cash is received.
B. determines when revenue is credited to a revenue account.
C. controls all revenue reporting for the cash basis of accounting.
D. is not in conflict with the cash method of accounting.
Answer: (A)
Explanation: The revenue recognition principle states that an individual must only record revenue after it has been earned, and not when the related cash is gathered.
6. Using accrual accounting, expenses are recorded and reported only
A. if they are paid before they are incurred.
B. if they are paid after they are incurred.
C. when they are incurred and paid at the same time.
D. when they are incurred, whether or not cash is paid.
Answer: (C)
What is Accrual Accounting?
Accrual accounting is a technique where expenses or revenues are listed when a trade transaction happens versus when reimbursement is made or received.
7. Deferred expenses have
A. not yet been recorded as expenses.
B. been incurred and paid.
C. been recorded as expenses and paid.
D. not yet been recorded as expenses or paid.
Answer: (C)
What is Deferred Expenses
Deferred expenses refer to the costs that have not yet been incurred by the firm but have been paid. Good examples of deferred expenses are startup costs and rent on office space.
8. Adjusting entries are
A. rarely needed in large companies.
B. the same as correcting entries.
C. needed to bring accounts up to date and match revenue and expense.
D. optional under generally accepted accounting principles.
Answer: (C)
Explantion: Adjusting entries are generally needed to bring up to date all account balances prior to the preparation of financial statements. Examples are accrued revenues, accrued expenses and prepaid expenses.
