Liabilities Are Increased With Debits And Decreased With Credits

Question: Which of the following describes the classification and normal balance of the fees earned account?

  1. asset, credit

  2. b. revenue, credit

  3. c. stockholders’ equity, debit

  4. d. liability, credit

  5. Answer: b. revenue, credit

  6. Question: Liabilities are debts owed by the business entity.

  7. Answer: TRUE

  8. Question: Assets are increased with debits and decreased with credits.

  9. Answer: TRUE

  10. Question: Which of the following entries records the receipt of cash from cash customers for services provided?

  11. a. Accounts Receivable, debit; Fees Earned, credit

  12. b. Fees Earned, debit; Cash, credit

  13. c. Cash, debit; Fees Earned, credit

  14. d. Fees Earned, debit; Accounts Receivable, credit

  15. Answer: c. Cash, debit; Fees Earned, credit

  16. Question: Which of the following types of accounts have a normal credit balance?

  17. a. liabilities and expenses

  18. b. common stock and dividends

  19. c. assets and liabilities

  20. d. revenues and common stock

  21. Answer: d. revenues and common stock

  22. Question: Which of the following entries records the purchase of common stock by stockholders?

  23. a. debit Fees Earned; credit Common Stock

  24. b. debit Common Stock; credit Accounts Receivable

  25. c. debit Dividends; credit Cash

  26. d. debit Cash; credit Common Stock

  27. Answer: d. debit Cash; credit Common Stock

  28. Question: Liabilities are increased with debits and decreased with credits.

  29. Answer: FALSE

  30. Question: The Dividends account is an expense.

  31. Answer: FALSE

  32. Question: Which of the following entries records the payment of an account payable?

  33. a. debit Cash; credit Accounts Payable

  34. b. debit Accounts Receivable; credit Cash

  35. c. debit Accounts Payable; credit Cash

  36. d. debit Cash; credit Supplies Expense

  37. Answer: c. debit Accounts Payable; credit Cash

  38. Question: All stockholders’ equity accounts record increases to the accounts with credits.

  39. Answer: FALSE

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