CHAPTER 3: CHART OF ACCOUNTS AND
DOUBLE ENTRY SYSTEM
PART 1: MULTIPLE CHOICES QUESTION
1.An account used to record the owner's investments in the business is called a(n):
A) Capital account.
B) Revenue account.
C) Expense account.
D) Liability account.
2.A record of the increases and decreases in a specific asset, liability, equity, revenue,
or expense is a(n):
A) Journal.
B) Posting.
C) Trial balance.
D) Account.
3.Which of the following statements is correct?
A) When a future expense is paid in advance, the payment is normally recorded in
a liability account called Prepaid Expense.
B) Promises of future payment are called accounts receivable.
C) Increases and decreases in cash are always recorded in the owner's equity
account.
D) An account called Tangible asset is commonly used to record increases and
decreases in both the Tangible and Intangible asset owned by a business.
4.A ledger is:
A) A record containing increases and decreases in a specific asset, liability,
equity, revenue, or expense item.
B) A collection of documents that describe transactions and events entering the
accounting process.
C) A list of all accounts with their debit balances at a point in time.
D) A record containing all accounts and their balances used by a company.
5.A debit is:
A) An increase in an account.
B) The right-hand side of a T-account.
