Test Review Chapter 2

The total of amounts on the left side of the accounting equation must always equal the total of amounts on the right side.

• True
• False

A record summarizing all the information pertaining to a single item in the accounting equation is known as a(n):

• transaction
• balance
• account
• record

An accounting device used to analyze transactions is called a:

• ledger
• record
• T-account
• calculator

In a T account, amounts recorded on the left side are called credits.

• True
• False

The side of the account that is increased is called the:

• debit
• credit
• average balance
• normal balance

A list of accounts used by a business is called a(n):

• chart of accounts
• accounting record
• database
• list

If one account is increased, another account on the same side of the equation:

• must also increase
• is moved to the other side of the equation
• must stay the same
• must be decreased

Every transaction must affect accounts on both sides of the accounting equation.

• True
• False

Which one of the following questions is not asked every time a transaction is analyzed into its debit and credit parts?

• how is each account changed?
• what is the new balance of each account?
• which accounts are affected?
• how is each account classified?

A business paid cash for supplies. How is this transaction recorded?

• credit cash, debit supplies
• debit cash, debit supplies
• debit cash, credit supplies
• credit cash, credit supplies