ACG2021 Chpt 3 and 4 Conceptual Questions

Genesis Company declares and pays a $900 dividend to shareholders. This transaction will immediately affect the A) retained earnings statement and balance sheet only. B) income statement and retained earnings statement only. C) balance sheet only. D) balance sheet and cash flows statement only. E) income statement only

A

If a company buys supplies on account, then A) assets increase and liabilities increase. B) assets increase and stockholders' equity increases. C) assets decrease and liabilities increase. D) assets increase and assets decrease. E) liabilities increase and liabilities decrease.

A

If a company pays for a one-year insurance policy that will expire next year, then A) assets increase and assets decrease. B) assets increase and liabilities decrease. C) assets decrease and liabilities increase. D) assets increase and stockholders' equity increases. E) liabilities increase and liabilities decrease.

A

What type of account is unearned revenue? A) Liability B) Expense C) Revenue D) Asset E) Equity

A

Which of the following is not reported as a financing activity in the statement of cash flows? A) Buying equipment B) All of these are financing activities. C) Paying dividends D) Issuing shares of stock E) Borrowing money

A

Posting A) transfers ledger transaction data to the journal. B) transfers journal entry amounts to ledger accounts. C) normally occurs before journalizing. D) occurs after finishing the financial statements. E) is an optional step in the recording process.

B

The effects of a purchase of equipment for cash on the basic accounting equation are to A) decrease assets and decrease liabilities. B) increase assets and decrease assets by equal amounts. C) increase assets and increase liabilities. D) increase assets and increase stockholders' equity. E) increase assets and decrease stockholders' equity.

B

When a trial balance balances, it is an indication that A) the company has been profitable. B) debits equal credits. C) all transactions have been journalized. D) all journal entries have been posted. E) the account balances are correct.

B

Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner? A) Retained Earnings and Supplies B) Equipment and Supplies Expense C) Dividends and Service Revenue D) Service Revenue and Accounts Receivable E) Rent Expense and Accounts Payable

B

A trial balance A) does not distinguish between debits and credits. B) proves that all transactions have been recorded. C) is a list of accounts with their balances at a given time. D) will not balance if a correct journal entry is posted twice. E) proves the mathematical accuracy of journalized transactions.

C

If cash is received from owners as an investment by stockholders A) assets will increase and liabilities will decrease. B) assets will decrease and liabilities will decrease. C) stockholders' equity will increase and assets will increase. D) retained earnings will increase and assets will increase. E) liabilities will increase and assets will increase.

C

Which of the following is evidence that a transaction has occurred that needs to be recording in a company's accounting records? A) Ledger B) Trial balance C) Source document D) Journal E) Chart of accounts

C

Debits A) increase both assets and liabilities. B) decrease assets and increase liabilities. C) decrease both assets and liabilities. D) increase assets and decrease liabilities. E) do not affect assets or liabilities.

D

Employees have worked for one week and have earned $5,000 in wages. The company does not record wages until they are paid. Recording the payment of wages A) decreases assets and increases liabilities. B) increases liabilities and decreases liabilities. C) decreases liabilities and decreases stockholders' equity. D) decreases assets and decreases stockholders' equity. E) increases stockholders' equity and decreases stockholders' equity.

D

If cash is received in advance from a customer A) assets will decrease and liabilities will decrease. B) stockholders' equity will decrease and assets will increase. C) retained earnings will increase and assets will increase. D) liabilities will increase and assets will increase. E) assets will increase and liabilities will decrease.

D

Payment of a dividend A) decreases cash and increases stockholders' equity. B) increases expenses and decreases cash. C) increases cash and increases stockholders' equity. D) decreases cash and decreases retained earnings. E) increases retained earnings and increases expenses

D

What journal entry is recorded as a result of performing services in exchange for cash? A) A debit to Revenue and a credit to Cash B) A debit to Cash and a credit to Retained Earnings C) A debit to Cash and a credit to Unearned Revenue D) A debit to Cash and a credit to Revenue E) A debit to Cash and a debit to Unearned Revenue

D

Which of the following best describes a chart of accounts A) A chart of accounts is the list of accounts deemed suitable for firms belonging to a particular industry. B) A chart of accounts is the list of a firm's accounts that have zero balances at a particular point in time. C) A chart of accounts is the list of accounts allowed by the Financial Accounting Standards Board. D) A chart of accounts is the list of the accounts in a given firm's ledger. E) A chart of accounts is the list of a firm's accounts that have non-zero balances at a particular point in time.

D

Accounts with normal credit balances include A) revenues and assets. B) expenses and stockholders' equity. C) assets and liabilities. D) revenues and expenses. E) liabilities and stockholders' equity.

E

If a company borrows money from a bank, then A) assets increase and liabilities decrease. B) assets increase and stockholders' equity increases. C) assets decrease and liabilities increase. D) assets increase and stockholders' equity decreases. E) assets increase and liabilities increase.

E

Which of the following events is not recorded in a company's accounting records? A) A company provides services to a customer for cash. B) Equipment is purchased on account. C) The owner withdraws cash for personal use. D) A cash investment is made into the business. E) An employee is terminated.

E

Which of the following is not a part of a complete journal entry? A) All of these are shown in a completed journal entry B) A brief explanation of the transaction C) The accounts and amounts to be debited and credited D) The date of the transaction E) The balance of each account affected by the transaction

E