Chapter 3 Exercise-ACC 556

On June 1, 2014, England Inc. reported a cash balance of $21,000. During June, England made deposits of $8,000 and made disbursements totaling $24,000. What is the cash balance at the end of June?

$5,000 debit balance

Which of the following is not an example of a source document that provides evidence of a transaction?

A trial balance

Which of the following statements is not true?

Expenses increase stockholders' equity.

Salaries and wages payable is a type of expense.

False

Match the items below by entering the appropriate code letter in the space provided

Ledger: The entire group of accounts maintained by a company. Posting: Transferring journal entries to ledger accounts. Debit: Left side of an account. Chart of accounts: A list of all the accounts used by a company. Account: An accounting record of increases and decreases in specific assets, liabilities, and stockholders' equity items. Trial balance: A list of accounts and their balances at a given time. Journal: Shows the debit and credit effects of specific transactions Source Document: Evidence that a transaction has taken place. Revenue account: Has a credit normal balance Normal account balance: The side which increases an account.

Are advanced receipts from customers treated as revenue at the time of receipt? Why or why not?

No, revenue cannot be recognized until the work is performed.

An account is often referred to as a T-account because of the way it is constructed.

True

Economic events that require recording in the financial statements are called accounting transactions.

True

Operating activities are the types of activities the company performs to generate profits.

True

Revenues are a subdivision of stockholders' equity.

True

Borrowing money and issuing shares of stock are

financing activities.

The purpose of the ledger is to

keep in one place all information about changes in specific account balances.

All of the following are characteristics of every accounting information system except it is a system

of data storage hardware for the chart of accounts.

The primary purpose of the trial balance is to

prove the equality of the debit and credit amounts after posting.

Which one of the following represents the expanded basic accounting equation?

Assets= Liabilities + Common Stock + Revenues - Expenses - Dividends

If total liabilities decreased by $4,000, then

assets must have decreased by $4,000, or stockholders' equity must have increased by $4,000.

All of the following statements regarding the double-entry system are true except

both sides of the accounting equation must be affected when recording a transaction using the double-entry system

An expense

decreases stockholders' equity.