1. A withdrawal by the owner is recorded as a deduction from assets and an increase in expenses: True or False

2. To keep the fundamental accounting equation in balance, debits and credits must be in balance and equal amounts must be on each side of the equation: True or Fasle

3. Coffee Co. has a $3,600 balance in Prepaid Insurance that represents the premium paid in advance for a six-month liability insurance policy. Assuming that 4 months of premium is still remaining, the adjustment would be recorded in the work sheet as a

a. credit to insurance expense $2,400 b. Debit to insurance expense $2,400 c. Credit to prepaid insurace $1,200

d. Debit ot prepaid insurance $1,200

4. If accounts payable have increased during a period

a. revenues on an accrual basis are less than revenues on a cash basis

b. expenses on an accrual basis are less than expenses on a cash basis

c. expenses on an accrual basis are the same as expenses on a cash basis

d. expenses on an accrual basis are greater than expenss on a cash basis

5. Ott Company sold services for cash. What are the effects on the fundamental accounting equation?

a. Assets increase; liabilities, no effect; owner’s equity increases

b. Assets decrease; liabilities, no effect; owner’s equity increases

c. Assets increase; liabilities, no effect; owner’s equity decreases

d. Assets increase; liabilities, increase; owner’s equity, no effect

6. Withdrawals of assets from a business by the owners are considered to be expenses True or False

7. The Income Summary account has a debit balance of $10,000 prior to closing. The owner's Drawing account has a balance of $7,000 before closing. The owner's Capital account will

a. Decrease $10,000 b. Increase $17,000 c. Increase $10,000 d. Decrease $17,000. e. Increase $7,000

8. Kaufman Company had a beginning normal balance of $15,000 in the accounts payable account. The accountant posted a $5,000 credit on May 6, a $2,500 credit on May 14, and a $8,000 debit on May 26. What is the balance of accounts payable in the general ledger?

a .$14,500 credit b. $15,500 credit c. $4,500 debit d. $15,500 debit