Types of Business Transactions Quiz
1. When an owner invests personal cash into a brand new business bank account, how are the business records affected?
Cash decreases and Revenue increases
Cash increases and Owner's Capital increases
Cash increases and Accounts Payable increases
Expenses increase and Owner's Capital decreases
2. A business purchases new office equipment and pays for it immediately using cash from the bank. What is the impact?
Equipment increases and Cash decreases
Equipment increases and Accounts Payable increases
Cash increases and Equipment decreases
Equipment increases and Revenue increases
3. What does it mean when a business purchases items or services "on account"?
The business paid for the items using a credit card linked directly to revenue
The business received immediate cash payment from a customer
The business bought items on credit and agrees to pay the vendor at a later date
The bank automatically deducted the amount from the checking account
4. Buying office supplies on credit results in an increase to the Supplies asset account and an increase to which liability account?
Accounts Receivable
Supplies Expense
Owner's Capital
Accounts Payable
5. When a business performs a service and the customer pays cash immediately on the spot, which two accounts are affected?
Cash and Revenue
Accounts Receivable and Revenue
Cash and Accounts Payable
Revenue and Owner's Capital
6. If a business delivers goods to a customer who promises to pay next month, what account tracks the amount owed by that customer?
Accounts Payable
Accounts Receivable
Cash
Unearned Revenue
7. When a company pays its monthly office rent immediately with cash, what is the impact on the accounts?
Rent Expense increases and Cash increases
Rent Expense increases and Cash decreases
Accounts Payable decreases and Cash decreases
Rent Asset increases and Revenue decreases
8. A business writes a check to a vendor to settle a balance previously bought on credit. Which statement describes this transaction?
Accounts Payable decreases and Cash decreases
Accounts Receivable decreases and Cash increases
Accounts Payable increases and Cash decreases
Expenses increase and Cash decreases
9. When a business collects a check from a client who was billed last month, what happens to the accounts?
Cash increases and Revenue increases
Cash increases and Accounts Receivable decreases
Cash increases and Accounts Payable decreases
Accounts Receivable increases and Cash decreases
10. Under the double-entry accounting system, every single business transaction must affect at least how many accounts?
One account
Two accounts
Three accounts
Four accounts
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