MUHASEBE I - Deneme Sınavı - 11

For each transaction, one or more accounts must be debited, or entered on the left side of the account, and one or more accounts must be credited, or entered on the right side of the account, and the total monetary amount of the debits must equal the total dollar amount of the credits. The equality of debits and credits provides the basis for the double-entry system of recording transactions.

T-accounts have a title and include two sides: Debit (left) and credit (right). Debit represents the left side of an account. Credit represents the right side of an account.

The journal is the main book which includes the original entries of company’s transactions. Transactions are recorded in chronological order (following the order in which they occurred) by applying debit and credit procedure. In other words, journal entries include debit and credit effects of each transaction.

A trial balance is a list of all ledger accounts with their balances at a point in time. A trial balance summarizes the accounts by listing all the accounts with their balances—assets first, followed by liabilities, and then owner’s equity.

Dept account represents a company's obligation to pay off a short-term debt to its creditors or suppliers. It appears on the balance sheet under the current liabilities.

Prepaid Expenses. Companies might pay certain expenses in advance, such as insurance and rent. A prepaid expense is considered as an asset because the prepayment provides a future benefit for the business. Prepaid Rent, Prepaid Insurance, and Supplies are examples of prepaid expenses. The correct answer is E.

Notes Receivable. A note receivable is similar to an account receivable, but a note receivable is more formal than Accounts Receivable because the customer signed a formal note. Notes receivable usually includes interest. the correct answer is E.

The most typical liability accounts:

Accounts Payable. The Accounts Payable account is the opposite of Accounts Receivable. A or The company promises to pay a debt in the future. Arises from a credit purchase.

Notes Payable. A note payable is the opposite of a Note Receivable. The Notes Payable account includes the amounts the company must pay because the company signed a written promise to pay a debt amount in the future. Notes payable, like notes receivable, usually involves interest.

Unearned Revenue (Advances from customers). The obligation occurs when a company receives cash from a customer in advance but has not provided the product or service. The company gives promise to provide services or deliver goods in the future.

Accrued Liabilities. An accrued liability is a liability for an expense you have not yet paid. In another words, an amount owed but not paid yet. Interest Payable, Salary Payable, and Income Tax Payable are typical accrued liability accounts for most companies.

The correct answer is D.

Posting is the procedure of transferring journal entries to the ledger accounts. The correct answer is D.

Assets, distributions, and expenses increase by debiting (on left side) and normally show debit balance. The correct answer is C.

Liabilities, contributions, and revenues increase by crediting (on right side) and normally show credit balance. The correct answer is C.

Dr./Cr. Rules for Assets: Assets increase on left side by debiting while decrease on right side by crediting and normally show debit balance.

Dr./Cr. Rules for Liabilities: Liabilities increase on right side by crediting while decrease on left side by debiting and normally show credit balance.

Dr./Cr. Rules for Contributions (Owner’s capital): Contributions increase on right side by crediting while decrease on left side by debiting and normally show credit balance.

Dr./Cr. Rules for Distributions (Owner’s withdrawals): Distributions increase on left side by debiting while decrease on right side by crediting and normally show debit balance.

Dr./Cr. Rules for Revenues: Revenues increase on right side by crediting while decrease on left side by debiting and normally show credit balance.

Dr./Cr. Rules for Expenses: Expenses increase on left side by debiting while decrease on right side by crediting and normally show debit balance.

The correct answer is B.

Dr./Cr. Rules for Assets: Assets increase on left side by debiting while decrease on right side by crediting and normally show debit balance.

Dr./Cr. Rules for Liabilities: Liabilities increase on right side by crediting while decrease on left side by debiting and normally show credit balance.

Dr./Cr. Rules for Contributions (Owner’s capital): Contributions increase on right side by crediting while decrease on left side by debiting and normally show credit balance.

Dr./Cr. Rules for Distributions (Owner’s withdrawals): Distributions increase on left side by debiting while decrease on right side by crediting and normally show debit balance.

Dr./Cr. Rules for Revenues: Revenues increase on right side by crediting while decrease on left side by debiting and normally show credit balance.

Dr./Cr. Rules for Expenses: Expenses increase on left side by debiting while decrease on right side by crediting and normally show debit balance.

The correct answer is A.

Dr./Cr. Rules for Distributions (Owner’s withdrawals): Distributions increase on left side by debiting while decrease on right side by crediting and normally show debit balance. The correct answer is A.

Companies might sell their goods and services on account and receives a promise for future collection of cash. The Accounts Receivable account holds a customer’s promise to pay in the future for services or goods sold on account. Arises from a credit sale. The company collects cash from the customer sometime after the sale. The correct answer is A.

Assets are economic resources that provide a future benefit for a business –something the business
owns. Most firms use the following asset accounts:
• Cash 
• Accounts Receivable

• Notes Receivable
• Prepaid Expenses. 
• Land 
• Buildings
• Equipment, Furniture, and Fixtures.

This section describes typical owner’s equity accounts. The owner’s claims to the assets of the business is called owners’ equity. A company has separate accounts for each element of owner’s equity. Remember the extended version of accounting equation!
• Owner,Capital. Owner’s Capital account represents the net contribution of the owner in the business.
• Owner, Withdrawals. The amounts taken out of the business by the owner appear in a separate account titled Withdrawals, or Drawing.
• Revenues. The company will receive assets (for example, cash) in exchange for goods sold and services rendered. 
• Expenses. Expenses use up assets or create liabilities in the course of operating a business. The cost of operating a business is called expense

A chart of accounts is a created list of the account names used by an organization to define each class of items. A chart of accounts is used to organize a company’s accounts. Chart of accounts is simply a list of account names that a company uses in its general ledger for recording various business transactions. It provides guidance to accountants or other relevant persons in using specific account names while recording transactions.

Any entry made on the left side of the account is a debit (abbreviated Dr.), and any entry made on the right side is a credit (abbreviated Cr.). These terms are used to describe the place of entries in recording process not for “increase” or “decrease”. For example, entering an amount on the left side of an account is called debiting while crediting refers to the act of making an entry on the right side of an account. Also, if the sum of the left side exceeds the sum of the right side of an account, a debit balance occurs. other words, debit balance shows the difference between total amounts of the left and the right side where debit amount exceeds the credits. In reverse situation, when the credit amount exceeds the debits, credit balance occurs. Credit balance shows the difference between total amounts of the right and the left side where credit amount exceeds the debits.