accounting chapter 3 final
an account consists of two parts: 1 - a left or debit side and 2 - a right or credit side
false
collection on an account receivable will increase both cash and accounts receivable
false
debit and credit can be interpreted to mean "bad" and "good" respectively
false
dividends are classified as an expense
false
if total assets are increased, there must be a corresponding increase in liabilities or a decrease in stockholders' equity
false
liabilities are established with debits and decreased with credits
false
revenue increases stockholders' equity and should be recorded whenever cash is received from customers
false
the dividends account is a subdivision of the retained earnings account and appears as an expense on the income statement
false
the double-entry system of accounting refers to the placement of a double line at the end of a column of figures
false
the normal balance of all accounts is a debit
false
the normal balance of an asset is a credit
false
the normal balance of the dividend account is a credit
false
the recording process becomes more efficient and informative if all transactions are recorded in one account
false
transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts
false
under the double-entry system, revenues must always equal expenses
false
wages payable is a type of expense
false
a revenue account is
increased by credits
collection of a 600 accounts receivable
increases asset 600, decreases asset 600
the purchase of an asset on credit
increases assets and liabilities
a revenue generally
increases assets and stockholders equity
a credit to a liability account
indicates an increase in the amount owed to creditors
a revenue account
is increased with a credit
which of the following items has no effect on retained earnings
land purchase
the purchase of an asset for cash
leaves total assets unchanged
the sale of an asset on credit for what it cost
leaves total assets unchanged
which account below is not a subdivision of stockholders' equity
liabilities
the unearned service revenue account is classified as a
liability
when a corporation distributes a dividend the
most common form of distribution is a cash dividend
a payment of a portion of accounts payable will
not affect stockholders' equity
which of the following is an asset
prepaid rent
an account is often referred to as a T account because of the way it is constructed
true
an increase in an asset is recorded by a debit
true
assets are decreased with a credit
true
each transaction must be analyzed in terms of its effect on the accounts before it can be recorded in a journal
true
economic events that require recording in the financial statements are called account transactions
true
for a T account, an account balance is the difference in total dollars between total debit amounts and total credit amounts
true
if a revenue account is credited, the revenue account is increased
true
prepaid expenses are assets
true
revenues are a subdivision of stockholders' equity
true
source documents can provide evidence that a transaction has occurred
true
the payment of a liability decreases both cash and accounts payable
true
unearned revenues are classified as liabilities on the balance sheet
true
an expense
decreases stockholders' equity
which of the following accounts is increased with a debit
dividends
a credit is not the normal balance for which account listed below
dividends account
which statement is incorrect
dividends are shown on the income statement
which of the following statements is not true
expenses increase stockholders' equity
a new account is opened for each transaction entered into by a business firm
false
a decrease in liability is recorded by a debit
true
osborn enterprises
1400 credit
england inc
2000 debit balance
baxter inc
284000 credit
goebel inc
3000 debit
metz industries
30000 credit
in the first month of operations, the total of the debit entries to the cash account amounted to 1200 and the total of the credit entries to the cash account amounted to 800. the cash account has a
400 debit balance
schwenn enterprises
44000 debit
in the first month of operations, the total of the debit entries to the cash account amounted to 1000 and the total of the credit entries to the cash account amounted to 400. the cash account has a
600 debit balance
in the first month of operations, the total of the debit entries to the cash account amounted of 1400 and the total of the credit entries to the cash account amounted to 600. the cash account has a
800 debit balance
janes bakery
9000 credit
which one of the following represents the expanded basic accounting equation
A+D+E=L+CS+R
kern enterprises
70000 debit
if services are rendered for cash then
assets will increase
which accounts normally have debit balances
assets, expenses and dividends
a credit balance in a liability account indicates that an error in recording has occurred
false
a credit means that an account has been increased
false
a debit means that an account has been decreased
false
an investment by the stockholders in a business increases
assets and stockholders' equity
powers corporation received a cash advance of 500 from a customer - as a result of this event
assets increased by 500
if total liabilities decreased by 4000 then
assets must have decreased by 4000 or stockholders' equity must have increased by 4000
if total liabilities increased by 5000 then
assets must have increased by 5000 or stockholders' equity must have decreased by 5000
courtney company purchased equipment for 1800 cash - as a result of this event
assets remained unchanged
if expenses are paid in cash then
assets will decrease
if a company buys a 700 machine on credit, this transition will affect the
balance sheet only
if a company pays dividends of 10000
both a and c
comstock company provided consulting services and billed the client 2500 - as a result of this event
both b and c
if a company issues common stock for 40000 and uses 30000 of the cash to purchase a truck
c or d (pick one)
an accountant has debited an asset account for 800 and credited a liability account for 600 - which of the following would be an incorrect way to complete the recording of the transaction
debit a stockholders' equity account for 200
a debit to an account always indicates an increase in that account
false
an accounted has debited an asset for 900 and credited a liability account for 500. what can be done to complete the recording of the transaction
credit a different asset account for 400
an accountant has debited an asset account for 1000 and credited a liability account for 500 - what can be done to complete the recording of the transaction
credit a different asset account for 500
an accountant has debited an asset account for 900 and credited a liability account for 500 - what can be done to complete the recording of the transaction
credit a different asset account for 500
equipment costing 20000 is purchased by paying 5000 cash and signing a note payable for the remainder. the journal entry should include a
credit to cash
equipment costing 20000 machine is purchased by paying 5000 cash and signing a note payable for the remainder. the journal entry should include a
credit to notes payable
an account will have a credit balance if the
credits exceed the debits
an accounted has debited an asset account for 800 and credited a liability account for 600 - which of the following would be an incorrect way to complete the recording of the transaction
debit a stockholders' equity account for 200
which of the following correctly identifies normal balances of accounts
debit credit credit credit debit
when a company receives a utility bill but will not pay it right away it should
debit utilities expense and credit accounts payable
when a company has performed a service but has not yet received payment it
debits accounts receivable and credits revenue from services
when a company performs a service but has not yet received payment it
debits accounts receivable and credits service revenue
a company that receives money in advance of performing a service
debits cash and credits unearned fees
a company that receives money in advance of performing a service
debits cash and credits unearned service revenue
the payment of a liability
decreases assets and liabilities
a paid dividend
decreases assets and stockholders' equity
howard company had a transaction that caused a 5000 increase in both assets and total liabilities - this transaction could have been a
purchase of office equipment of 12000 paying 7000 cash and issuing a note payable for the balance
carey services inc
reduces stockholders' equity by 2000
stockholders' equity is increased by
revenues
which accounts normally have credit balances
revenues, liabilities, and retained earnings
which of the following journal entries is recorded correctly and in the basic format
salaries/wages expense 550 advertising expense 950 cash 1500
which of the following accounts is increased with a credit
sales revenue
the normal balance of any account is the
side which increases that account
if services are rendered on account then
stockholders' equity will increase
the cash account has a credit balance. which statement is true
the account needs to be analyzed to determine the reason for the credit balance
budke and corporation paid dividends of 5000 - as a result of this event
the dividends account was debited for 5000
when a service has been performed but no cash has been received which of the following statements is true
the entry includes a debit to accounts receivable
if an individual asset is increased then
there could be an equal decrease in another asset
why are expenses increased with a debit
they decrease stockholders' equity thus they increase with a debit
when collection is made on accounts receivable
total assets will remain the same
an accounting record that includes a list of accounts and their balances at a given time is called a
trial balance
a decrease in a liability account is recorded by a debit
true
