Accounting 1 Unit 3 Test

What is an example of an account that has a normal credit balance?

• Cash

• Office Equipment

• Sales

• Supplies

What is an example of an account that has a normal debit balance?

• Accounts Payable/Ray's Office Equipment

• Insurance Expense

• Ray Smith, Capital

• Sales

Accounts Payable/Dale's Office Supplies, Accounts Payable/McCormick Equipment Company, and Accounts Payable/John's Office Repair Service are all classified as:

• assets.

• liabilities.

• owner's equity.

• revenue.

Mariah Smith, Capital and Mariah Smith, Drawing are both classified as:

• owner's equity.

• expenses.

• liabilities.

• revenue.

Which is an example of an account that carries a normal credit balance?

• Cash

• Joan Brown, Drawing

• Supplies

• Tyler Jackson, Capital

What is the effect on owner's equity when a business receives $2,000 cash from sales?

• Owner's equity is decreased by $2,000.

• Owner's equity is increased by $2,000.

• Owner's equity is decreased by $4,000.

• Owner's equity is increased by $4,000.

Accounts Receivable/Highland School and Accounts Receivable/Sam Jones are both classified as:

• assets.

• expenses.

• liabilities.

• revenue.

What is the effect on assets when the owner increases owner's equity by investing $1,000 in the business?

• Assets are decreased by $1,000.

• Assets are decreased by $2,000.

• Assets are increased by $1,000.

• Assets are increased by $2,000.

Mary is preparing a Balance Sheet. When she completes the Owner's Equity Section, what should the end result represent?

• The Total Assets are less than the Owner's Equity.

• The Total Assets plus Total Liabilities Owner's Equity.

• The Total Assets should equal Total Liabilities plus Owner's Equity.

• The Total Assets should equal Total Liabilities minus Owner's Equity

What is the effect when $300 cash is paid to Accounts Payable/Bob's Office Supply?