accounting chapter 3 final

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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


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