Acct 110 Multiple Choice Chapter 3 Homework Handout Instructions: Choose the best word or phrase that completes each of the following statements. Write the letter that corresponds to your answer choice in the column to the right of the statement. 1 Letter A debit (A) decreases cash; (B) decreases revenues; (C) increases owner's equity; (D) decreases drawing; (E) increases liabilities. 2 3 4 5 6 7 The normal balance is a credit in a(n) (A) asset account; (B) capital account; (C) expense account; (D) drawing account; (E) none of these. A business pays cash for two years of insurance coverage. The transaction (A) increases the drawing account and decreases an asset account; (B) includes a debit to the cash account; (C) decreases an asset account and a liability account; (D) increases expenses; (E) decreases one asset account and increases another asset account. A purchase of equipment on account (A) decreases cash; (B) increases an asset; (C) decreases owner's equity; (D) decreases expenses; (E) decreases revenue. The assets of a business may consist of a number of items, such as (A) accounts payable; (B) cash; (C) delivery fees; (D) drawing; (E) none of these. Totals on the debit and credit sides to determine the balance of an account are known as (A) footings; (B) credits; (C) debits; (D) rulings; (E) revenues. The normal balance is a debit in a (A) liability account; (B) revenue account; (C) debt account; (D) capital account; (E) drawing account. When a loan is paid, a(n) (A) liability account is debited; (B) expense account is debited; 8 (C) asset account is debited; (D) revenue account is credited; (E) drawing account is debited. After the Statement of Owner's Equity is prepared, which of the following is carried over 9 to the Balance Sheet? (A) Net Income; (B) Ending Drawing Balance; (C) Ending Capital Balance; (D) Total Assets; (E) none of these. 2