Chapter 2 - Quiz 1

The left side of an account is

• blank.

• a description of the account.

• the debit side.

• the balance of the account.

A debit to an asset account indicates

• an error.

• a credit was made to a liability account.

• a decrease in the asset.

• an increase in the asset.

Which of the following correctly identifies normal balances of accounts?

• Assets Debit Liabilities Credit Equity Credit Revenues Debit Expenses Credit

• Assets Debit Liabilities Credit Equity Credit Revenues Credit Expenses Credit

• Assets Credit Liabilities Debit Equity Debit Revenues Credit Expenses Debit

• Assets Debit Liabilities Credit Equity Credit Revenues Credit Expenses Debit

An account will have a credit balance if the

• credits exceed the debits.

• first transaction entered was a credit.

• debits exceed the credits.

• last transaction entered was a credit.

Assets normally show

• credit balances.

• debit balances.

• debit and credit balances.

• debit or credit balances.

Which account below is not a subdivision of retained earnings?

• Dividends

• Revenues

• Expenses

• Share Capital-Ordinary

Which of the following statements is not true?

• Expenses increase equity.

• Expenses have normal debit balances.

• Expenses decrease equity.

• Expenses are a negative factor in the computation of net income.

On January 14, Ericsson Industries purchased supplies of $500 on account. The entry to record the purchase will include

• a debit to Supplies and a credit to Accounts Payable.

• a debit to Supplies Expense and a credit to Accounts Receivable.

• a debit to Supplies and a credit to Cash.

• a debit to Accounts Receivable and a credit to Supplies.

At January 1, 2025, LeAnna Industries reported retained earnings of $260,000. In 2025, LeAnna had a net loss of $60,000 and paid dividends of $40,000. At December 31, 2025, the amount of retained earnings is

• $260,000.

• $280,000.

• $200,000.

• $160,000.