ACCT 201 Exam 1,2&3 Questions and Answers
2026|2027
1. Assets normally carry a
Debit balance.
2. Liabilities normally carry a
Credit balance.
3. Common stock is recorded with a
Credit balance.
4. Treasury stock purchase reduces
Stockholders’ Equity.
5. Revenue is recognized when
earned, not when cash is received.
6. Matching principle requires expenses to be recorded in the same period as
related revenues.
7. Adjusting entries are made at
the end of the accounting period.
8. Unearned revenue is a
Liability.
9. Prepaid expenses are
Assets.
10. Depreciation expense reduces
Net Income.
11. Balance Sheet shows Assets,
Liabilities, Equity.
12. Income Statement shows
Revenues and Expenses.
13. Statement of Cash Flows shows
, Operating, Investing, Financing activities.
14. Retained earnings increase with
Net Income.
15. Retained earnings decrease with
Dividends.
16. Dividends are not an
Expense.
17. Accrued expenses are
Liabilities.
18. Accrued revenues are
Assets.
19. Supplies used are recorded as
Expense.
20. Supplies on hand are recorded as
Asset.
21. Debit Cash, Credit Common Stock
Issuance of stock.
22. Debit Rent Expense, Credit Cash
Rent payment.
23. Debit Accounts Receivable, Credit Revenue →
Sale on account.
24. Debit Salaries Expense, Credit Salaries Payable →
Accrued salaries.
25. Debit Depreciation Expense, Credit Accumulated Depreciation →
Depreciation entry.
26. Debit Cash, Credit Unearned Revenue →
Advance payment received.
27. Debit Unearned Revenue, Credit Revenue →
Revenue earned.
2026|2027
1. Assets normally carry a
Debit balance.
2. Liabilities normally carry a
Credit balance.
3. Common stock is recorded with a
Credit balance.
4. Treasury stock purchase reduces
Stockholders’ Equity.
5. Revenue is recognized when
earned, not when cash is received.
6. Matching principle requires expenses to be recorded in the same period as
related revenues.
7. Adjusting entries are made at
the end of the accounting period.
8. Unearned revenue is a
Liability.
9. Prepaid expenses are
Assets.
10. Depreciation expense reduces
Net Income.
11. Balance Sheet shows Assets,
Liabilities, Equity.
12. Income Statement shows
Revenues and Expenses.
13. Statement of Cash Flows shows
, Operating, Investing, Financing activities.
14. Retained earnings increase with
Net Income.
15. Retained earnings decrease with
Dividends.
16. Dividends are not an
Expense.
17. Accrued expenses are
Liabilities.
18. Accrued revenues are
Assets.
19. Supplies used are recorded as
Expense.
20. Supplies on hand are recorded as
Asset.
21. Debit Cash, Credit Common Stock
Issuance of stock.
22. Debit Rent Expense, Credit Cash
Rent payment.
23. Debit Accounts Receivable, Credit Revenue →
Sale on account.
24. Debit Salaries Expense, Credit Salaries Payable →
Accrued salaries.
25. Debit Depreciation Expense, Credit Accumulated Depreciation →
Depreciation entry.
26. Debit Cash, Credit Unearned Revenue →
Advance payment received.
27. Debit Unearned Revenue, Credit Revenue →
Revenue earned.
