Question

11. The classification and normal balance of the accounts payable account is

1. an asset with a credit balance
2. a liability with a credit balance
3. owner's equity with a credit balance
4. revenue with a credit balance

        12. A credit balance in which of the following accounts would indicate a likely error?

            a. Fees Earned

            b. Salary Expense

            c. Janet James, Capital

            d. Accounts Payable

13. The process of initially recording a business transaction is called

        a. closing

        b. posting

               c. journalizing

               d. balancing

14. Gently Laser Clinic purchased laser equipment for $8,500, paid $2,250 down, with the remainder to be paid later. The correct entry would be

a. Equipment Cash	2,250	2,250
b. Cash	2,250
Accounts Payable Equipment	6,250	8,500
c. Equipment Expense	8,500
Accounts Payable Cash		2,250 6,250
d. Equipment Accounts Payable	8,500	6,250
Cash		2,250

16. All of the following accounts are increased with a debit except

1. Unearned Revenues
2. Land
3. Accounts Receivable
4. Cash

17. The accounting equation may be expressed as

a. Assets = Equities − Liabilities

b. Assets + Liabilities = Owner's Equity

c. Assets = Revenues − Liabilities

d. Assets − Liabilities = Owner's Equity

Answer 1

11. b. a liability with credit balance.

Accounts payable represents the amount payable to creditors for various purchases made by the business, so it is liability and not an asset or owner's equity. Whenever the business purchases goods from supplier on credit basis the amount which is payable to them will be shown as accounts payable by crediting the 'accounts payable' account. As liability shows credit balance normal balance of accounts payable is credit balance.

12. b. Salary expense

Salary expense is an expense and all expenses are debited, as a result, salary expense having credit balance indicates a likely error.

13.c. journalizing

Journalizing means entering the business transactions in the books of accounts. The entries are first recorded in journal book, so it is called jounalizing. Closing, balancing and posting comes after journalizing the transactions.

14. d.

Equipment	$8500
Accounts payable		$6250
Cash		$2250

As clinical equipment for a clinic is an asset, equipment account is debited. Accounts payable is credited because the remaining amount payable is liability and cash which is paid is decrease in asset, so credited.