Quiz Chapters 1 & 2

Question 1

What is the “normal balance” of the following account, and which causes and increase in the account?
Accounts payable

Answer 1

Normal balance: credit
Causes increase: credit

Question 2

What is the “normal balance” of the following account, and which causes and increase in the account?
Accounts receivable

Answer 2

Normal balance: Debit
Causes increase: Debit

Question 3

What is the “normal balance” of the following account, and which causes and increase in the account?
Retained earnings

Answer 3

Normal balance: credit
Causes increase: credit

Question 4

What is the “normal balance” of the following account, and which causes and increase in the account?
Service revenue

Answer 4

Normal balance: credit
Causes increase: credit

Question 5

What is the “normal balance” of the following account, and which causes and increase in the account?
Equipment

Answer 5

Normal balance: debit
Causes increase: debit

Question 6

What is the “normal balance” of the following account, and which causes and increase in the account?
Common stock

Answer 6

Normal balance: credit
Causes increase: credit

Question 7

What is the “normal balance” of the following account, and which causes and increase in the account?
Salary expense

Answer 7

Normal balance: Debit
Causes increase: debit

Question 8

What is the “normal balance” of the following account, and which causes and increase in the account?
Repair expense

Answer 8

Normal balance: debit
Causes increase: debit

Question 9

What is the “normal balance” of the following account, and which causes and increase in the account?
Cash

Answer 9

Normal balance: debit
Causes increase: debit

Question 10

What is the “normal balance” of the following account, and which causes and increase in the account?
Notes payable

Answer 10

Normal balance: credit
Causes increase: credit

Question 11

Prepare a single-step income statement for Powers Wrecking Service for the year ended December 31 yields the following information:
During the year, Powers had $428,000 of revenue from demolition services and $136,200 of revenue from salvage sales. Powers also had $1,565 of interest income from investments. Powers incurred $208,800 of wages expense, $24,470 of depreciation expense, $48,210 of supplies expense, $81,630 of rent expense, $15,420 of miscellaneous expense, and $43,520 of income taxes expense.

Answer 11

Revenues
Service revenue: $428000
Sales revenue: $136200
Interest income: $1565
Total revenue: $565765
Expenses
Wages expense: $208800
Rent expense: $81630
Supplies expense: $48210
Depreciation expense: $24470
Miscellaneous expense: $15420
Income tax expense: $43520
Total expenses: $422050
Net income: $143715