Test Bank For Accounting Principles 7Th Canadian Edition Volume 1 By Jerry J. Weygandt
The Test Bank for Accounting Principles 7th Canadian Edition Volume 1, authored by Jerry J. Weygandt, is a comprehensive resource for students who want to master the concepts of accounting. It provides practice questions and exercises, along with detailed solutions that can be used as a self-study tool or in conjunction with a traditional course. The test bank helps students to develop a deeper understanding of accounting principles, and it is designed to improve their analytical and critical thinking skills. It also serves as a valuable tool for instructors to assess student progress and create effective lesson plans.
The Test Bank for Accounting Principles 7th Canadian Edition Volume 1 covers a wide range of topics, including financial statements, accounting cycles, inventory costing, and internal control systems. It includes over 500 multiple-choice, true/false, and short-answer questions, along with comprehensive solutions and explanations. The test bank is organized by chapter and provides a convenient way for students to practice and review material. The questions are designed to challenge students and help them build their confidence in applying accounting concepts.
In addition to being a valuable study aid, the Test Bank for Accounting Principles 7th Canadian Edition Volume 1 by Jerry J. Weygandt can also help students prepare for professional exams such as the CPA or CMA. The test bank covers topics that are essential for these exams, and the questions are written in a similar style to those that appear on professional exams. This resource is an indispensable tool for students looking to succeed in their accounting studies and establish a strong foundation for a career in accounting.
CHAPTER 2 THE RECORDING PROCESS
CHAPTER Learning OBJECTIVES
1. Describe how accounts, debits, and credits are used to record business transactions. Debit means left and credit means right. The normal balance of an asset is a debit because assets are on the left side of the accounting equation. Assets are increased by debits and decreased by credits. The normal balance of liabilities and owner’s capital is a credit because they are on the right side of the accounting equation. Liabilities and owner’s capital are increased by credits and decreased by debits. Revenues increase owner’s equity and therefore are recorded as credits because credits increase owner’s equity. Credits increase revenues and debits decrease revenues. Expenses and drawings decrease owner’s equity and therefore are recorded as debits because debits decrease owner’s equity. Expenses and drawings are increased by debits and decreased by credits.
2. State how a journal is used in the recording process and journalize transactions. The steps in the recording process are the first three steps in the accounting cycle. These steps are: (a) analyze each transaction for its effect on the accounts, (b) record the transaction in a journal, and (c) transfer the journal information to the correct accounts in the ledger.
A journal: (a) discloses the complete effect of a transaction in one place, (b) provides a chronological record of transactions, (c) helps to prevent and locate errors because the debit and credit amounts for each entry can be easily compared, and (d) explains the transaction and, if there is one, identifies the source document.
3. Explain how a ledger helps in the recording process and post transactions. The entire group of accounts maintained by a company is called the ledger. The ledger keeps in one place all the information about changes in each of the specific account balances. Posting is the procedure of transferring journal entries to the ledger accounts. After the journal entries have been posted, the ledger will show all of the increases and decreases that have been made to each account.
4. Prepare a trial balance. A trial balance is a list of the accounts in the ledger and the account balances at a specific time. Its main purpose is to prove that debits and credits are equal after posting. A trial balance uncovers certain types of errors in journalizing and posting, and is useful in preparing financial statements. Preparing a trial balance is the fourth step in the accounting cycle.
Exercises
Exercise 1
Identify each of the following accounts as an asset, liability, equity, revenue or expense.
1. L. Ralph, Capital _____________
2. Consulting Revenue _____________
3. Accounts Payable _____________
4. Office Supplies _____________
5. Prepaid Advertising _____________
6. Machinery _____________
7. Cash _____________
8. L. Ralph, Withdrawals _____________
9. Salaries Expense _____________
10. Repairs & Maintenance _____________
11. Accounts Receivable _____________
12. Unearned Revenue _____________
13. Rent Revenue _____________
Solution 1 (5 min.)
1. Equity
2. Revenue
3. Liability
4. Asset
5. Asset
6. Asset
7. Asset
8. Equity
9. Expense
10. Expense
11. Asset
12. Liability
13. Revenue
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Describe how accounts, debits, and credits are used to record business transactions.
Section Reference: The Account
CPA: Financial Reporting
Exercise 2
For the accounts listed below, indicate if the normal balance of the account is a debit or credit.
Normal Balance
Accounts Debit or Credit
1.Repairs & Maintenance
2.Interest Receivable
3.Prepaid Insurance
4.Unearned Revenue
5.Insurance Expense
6.Fees Earned
7.Machinery
8.Notes Payable
9.Land
10.Owner Withdrawals
Solution 2 (5 min.)
Normal Balance
Accounts Debit or Credit
1. Repairs & Maintenance Debit
2. Interest Receivable Debit
3. Prepaid Insurance Debit
4. Unearned Revenue Credit
5. Insurance Expense Debit
6. Fees Earned Credit
7. Machinery Debit
8. Notes Payable Credit
9. Land Debit
10. Owner Withdrawals Debit
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Describe how accounts, debits, and credits are used to record business transactions.
Section Reference: The Account
CPA: Financial Reporting
Exercise 3
The following accounts relate to Harold’s Pool & Spas Co.:
1. Land
2. Installation Revenue
3. Land
4. Notes Receivable
5. Harold, Capital
6. Sales
7. Prepaid Insurance
8. Interest Payable
9. Commission Expense
10. Salaries Payable
11. Unearned Revenue
12. Harold, Withdrawals
Instructions
Use the form below to identify the type of account and its normal balance. The first one has been completed for you as an example.
Type of AccountNormal Balance
Asset Liability Equity Debit Credit
- __X__ ______ ___ __X__ _____
- _____ ______ ___ _____ _____
- _____ ______ ___ _____ _____
- _____ ______ ___ _____ _____
- _____ ______ ___ _____ _____
- _____ ______ ___ _____ _____
- _____ ______ ___ _____ _____
- _____ ______ ___ _____ _____
- _____ ______ ___ _____ _____
- _____ ______ ___ _____ _____
- _____ ______ ___ _____ _____
- _____ ______ ___ _____ _____
Solution 3 (10 min.)
Type of AccountNormal Balance
Asset Liability Equity Debit Credit
- __X__ ______ ___ __X__ _____
- _____ ______ X__ _____ __X__
- __X__ ______ ___ __X__ _____
- __X__ ______ ___ __X__ _____
- _____ ______ X__ _____ __X__
- _____ ______ X__ _____ __X__
- __X__ ______ ___ __X__ _____
- _____ __X___ ___ _____ __X__
- _____ ______ X__ __X__ _____
- _____ __X___ ___ _____ __X__
- _____ __X___ ___ _____ __X__
- _____ ______ X__ __X__ _____
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Describe how accounts, debits, and credits are used to record business transactions.
Section Reference: The Account
CPA: Financial Reporting
Exercise 4
The chart of accounts used by Fortier Copy Company is listed below:
10Cash30D. Fortier, Capital
12Accounts Receivable35D. Fortier, Drawings
15Paper Supplies40Photocopy Revenue
18Copy Machines51Advertising Expense
22Accounts Payable53Rent Expense
25Notes Payable54Wages Expense
28Unearned Revenue
Instructions
Indicate the proper accounts to be debited and credited for the following transactions by writing the account number(s) in the appropriate columns.
——————————————————————————————————————————
Number(s)Number(s)
of account(s)of account(s)
debitedcredited
——————————————————————————————————————————
1. Dan Fortier invests $90,000 cash to start the business.
——————————————————————————————————————————
2. Purchased three photocopy machines for $200,000, paying $50,000 cash and signing a 5-year, 6% note for the remainder.
——————————————————————————————————————————
3. Purchased $5,000 paper supplies on credit.
——————————————————————————————————————————
4. Cash photocopy revenue amounted to $7,000.
——————————————————————————————————————————
5. Paid $500 cash for radio advertising.
——————————————————————————————————————————
6. Paid $800 on account for paper supplies purchased in transaction 3.
——————————————————————————————————————————
7. Dan Fortier withdrew $1,500 from the business for personal expenses.
——————————————————————————————————————————
8. Paid $1,200 cash for rent for the current month.
——————————————————————————————————————————
9. Received $2,000 cash advance from a customer for future copying.
——————————————————————————————————————————
10. Billed a customer for $450 for photocopy work done.
——————————————————————————————————————————
11. Paid $400 for wages for the month.
——————————————————————————————————————————
Solution 4 (15 min.)
——————————————————————————————————————————
Number(s)Number(s)
of account(s)of account(s)
debitedcredited
——————————————————————————————————————————
1. Dan Fortier invests $90,000 cash to start the
business.1030
——————————————————————————————————————————
2. Purchased three photocopy machines for
$200,000, paying $50,000 cash and signing a
5-year, 6% note for the remainder.1810, 25
——————————————————————————————————————————
3. Purchased $5,000 paper supplies on credit. 15 22
——————————————————————————————————————————
4. Cash photocopy revenue amounted to $7,000. 10 40
——————————————————————————————————————————
5. Paid $500 cash for radio advertising. 51 10
——————————————————————————————————————————
6. Paid $800 on account for paper supplies
purchased in transaction 3.2210
——————————————————————————————————————————
7. Dan Fortier withdrew $1,500 from the business for
personal expenses.3510
——————————————————————————————————————————
8. Paid $1,200 cash for rent for the current month. 53 10
——————————————————————————————————————————
9. Received $2,000 cash advance from a
customer for future copying.1028
——————————————————————————————————————————
10. Billed a customer for $450 for photocopy work
done.1240
——————————————————————————————————————————
11. Paid $400 for wages for the month. 54 10
——————————————————————————————————————————
Bloomcode: Comprehension
Difficulty: Easy
Learning Objective: Describe how accounts, debits, and credits are used to record business transactions.
Section Reference: The Account
CPA: Financial Reporting
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