ACCT 284-Chapter 2-Exam 1

Each transaction....

-may effect either assets, liabilities, and/or stockholder's equity -has at least two effects on the accounting equation

The line item, Land, on the balance sheet results from a _____________.

Investing activity

Two sources of equity financing with increase stockholder's equity are ______.

Retained earnings and common stock

The common stock account is increased with an entry on the ______ side of the T-account.

Right

When a business issues stock, what does it give to its owners?

Stock certificates

A transaction may be recorded with an increase in a liability and a __________.

decrease in a stockholder's equity account

When a company pays its supplier for amounts owed, its Cash and Accounts ___________ accounts are decreased.

Payable

Show the effect of recording the borrowing of $10,000 from a bank on the accounting equation. ___________ by $10,000.

Assets increase and Liabilities increase

The _______ principle requires that assets and liabilities be recorded at the amounts that were measurable at the time transactions occur.

Cost

A company paid $2,000 cash to an employee for this month's salary. The entry to this transaction would include a _______ to Cash.

Credit

A company purchased supplies and promised to pay $200 for them next month. The increase in Accounts Payable would be recorded with a _________.

Credit

Acme Enterprises issued $20,000 of stock in exchange for cash. The posting of the journal entry will result in a $20,000 _________ to the Common Stock account.

Credit

Common stock has a normal _____ balance.

Credit

Debits must always equal ______ in each journal entry.

Credits

Transactions that involve exchanges involving assets, liabilities, and/or stockholder's equity between the company and someone else is called an __________ exchange.

External

Transactions are first entered in the ________.

Journal

The cash T-account is increased with an entry on the ____ side of the T-account.

Left

Identify the account title that may be used to record borrowing cash in exchange for a promissory note.

Note Payable

Identify the key activities necessary to start a business.

Obtain financing and purchase assets.

Accounts ________ is a liability account and represents amounts owed to suppliers.

Payable

What is the effect on total liabilities when a company buys a building in exchange for a 20-year not payable?

Total liabilities will increase

The journal entry to record the purchase of land for $30,000 cash includes ________.

a debit to land and a credit to cash