Acc Unit 5

t or f: if we record changes in the accounting equation such that debits always equal credits, then the accounting equation will always remain in balance

true

T/F Debits are on right side of T account

False

T/F: A credit to an account indicates an increase in that account.

False

On June 1, 2016, Fishermen Co. reported stockholders' equity of $148,000. During June, they generated revenues of $27,000, incurred expenses of $15,000, purchased land for $7,000 and paid dividends of $3,000. What is the amount of Stockholders equity on June 30, 2016? $175,000 $150,000 $157,000 $160,000

$157,000 148,000+27,000-15,000-3,000

Tammy Co. has the following account balances on December 3. Equipment $72,000 Common Stock $23,000 Dividends $7,300 Salaries and Wages Payable $7,000 Accounts Payable $5,200 Notes Payable $25,000 Salaries and Wages Expense $24,000 Utilities Expense $8,000 Accounts Receivable $6,000 Prepaid Insurance $6,000 Sales Revenue $89,000 Cash $13,000 What is the total for the debit column in Tammy Co.'s trial balance? $159,300 $141,500 $129,000 $164,500 $136,300 $57,000

$136,300 72,000+7,300+24,000+6,000+8,000+6,000+13,000

On June 1, 2019, Mermaidland Co. reported stockholders' equity of $128,000. During June, Mermaidland Co. generated revenues of $30,000, incurred expenses of $12,000, purchased supplies worth of $6,000 and paid dividends of $2,000. What is the balance of stockholders' equity on June 30, 2016? $162,000 $8,400 $126,000 $158,000 $144,000

$144,000

The trial balance is a listing of A general ledger accounts and their balances B the chart of accounts C the totals from the journal pages D transactions and events that impact the business entity's profitability

A general ledger accounts and their balances

The following transactions for the month of March have been journalized and posted to the proper accounts. Mar 1. The business received 7,000 cash and issued common stock to stockholders Mar 2. Paid the first month's rent of 500 Mar 3. Purchased equipment by paying 2000 cash and executing a note payable of 6000 Mar 4. purchased office supplies for 700 cash Mar 5. billed a client for 12,000 of design services completed Mar 6. Received 9000 on account for the services previously recorded What is the balance in accounts receivable? A. 3000 B. 10,000 C. 12,000 D. 9,000 E. 6,000

A. 3000 Acc receiv is increased (debited) by Mar 5 amount of 12000 and decreased (credited) by mar 6 amount of 9000 which gives balance of 3000

Which of the following is false? A. dividend decreases shareholders' equity, so it is a credit balance account B. cash increases assets, so it is a debit balance account C. accounts payable increases liability, so it is a credit balance account D. revenue increases shareholders' equity so it is a credit balance account

A. dividend decreases shareholders' equity, so it is a credit balance account Assets = Liab + Shareholders equity We increase assets by debit, and increase liability and shareholders' equity by credit Dividends reduce the stockholders' claims on retained earnings (reducing shareholder's equity) so it is a debit balance account

The following transactions took place for xiu xiu company during the month of june: a) purchased equip on account for 9,000 b) billed customers 5,000 for services performed c) made payment of 2300 on account for equip purchased earlier in the month d) colelcted 2900 on customer accounts for the services performed earlier in the month Based on the info given, which of the statements is correct about ending balance of cash at the end of June assuming the balance of cash at the beginning of june has a debit balance of 2800? A. the balance in cash account is a debit balance for 3400 at the end of june B. the balance in cash account is a credit balance of 600 C. cash is increased by 2300 during the month of june D. the balance in cash account is a debit balance for 2800 at the end of june E. cash is decreased by 2900 during the month of june

A. the balance in cash account is a debit balance for 3400 at the end of june

Expanded Accounting Equation

Assets - Liabilities = Permanent Owners Equity + Revenues - Expenses

Which of the following is false? A Expenses decrease stockholders' equity B A debit to an account indicates an increase in that account C Revenues and dividends affect retained earnings D A trial balance does not prove that all transactions have been recorded or that the ledger is correct

B A debit to an account indicates an increase in that account Asset and expenses are increased by debit. Liabilities and revenues are increased by credit. Retained earnings are affected by revenues, expenses, and dividends. The primary purpose of trial balance is to prove the mathematical equality of the debits and credits after posting. It will still balance even if incorrect accounts titles are used in journalizing/posting or if a journal entry has been left out. Expenses decrease stockholders' equity and revenues increase it.

On June 1, Oxford Company purchased $8,000 of office equipment from Comma Company. Oxford Company paid $2,000 in cash, and it signed a 6-month, 10% note payable for the remaining balance. How would Oxford Company record this transaction on June 1? (which entry is correct?) A Cash 2,000 Equipment 8,000 Notes Payable 6,000 B Equipment 8,000 Cash 2,000 Notes Payable 6,000 C Cash 2,000 Equipment 8,000 Notes Payable 10,000 D Notes Payable 6,000 Cash 2,000 Equipment 8,000 E Notes Receivable 8,000 Equipment 6,000 Cash 2,000

B Equipment 8,000 Cash 2,000 Notes Payable 6,000 Oxford Co would increase the asset account, equipment, with a debit for the cost of the item. Their cash account would be decreased by crediting it for $2,000, and the liability, notes payable, would be increased with a credit

TransAm Mail Service purchased equipment for $2,500. TransAm paid $400 in cash and signed a note for the balance. TransAm debited the Equipment account, credited Cash and A nothing else needs to be done B credited a liability account for $2,100 C debited the retained earnings account for $2,100 D credited another asset account for $400

B credited a liability account for $2,100

Sharon Foods, Inc. reported the following transactions for Sept 2016. 1. the business received 22000 cash and issued common stock. It was credited to common stock 2. the business purchased office equip for 9000 for which 2500 cash was paid and the balance was put on a note payable 3. paid insurance expense of 1500 cash 4. paid the September utility bill for 900 cash 5. paid 1500 cash for september rent 6. business had sales of 11000 in sept. of these sales, 60% were cash sales, and the balance was credit sales 7. the business paid 8000 cash for office furniture What are the total liabilities at the end of Sept 2016? A. 9000 B. 6500 C. 1500 D. none E. 11000

B. 6500 Liab = note payable = 9000 - 2500 = 6500

Delta Company received a cash of 700 in advance from a customer. As a result of this event, A. assets and stockholders equity increased by 700 B. liabilities increased by 700 C. revenue increased by 700 D. stockholder's equity decreased by 700 E. liabilities decreased by 700

B. liabilities increased by 700 Dr. Cash for 700 and Cr. Unearned rev (which is a liability) for 700

A payment of 500 to a vendor was recorded with a debit to Accounts Payable of 50 and a credit to cash of 500. Which of the following statements is true? A. all are true B. the credit column will be 450 larger than debit C. the debit column will be 450 larger than credit D. the trial balance will be misstated but not unequal E. none are true

B. the credit column will be 450 larger than debit Trial balance will be unequal because debits did not equal credits in that incorrect journal entry. The credit column will be larger by 450 (500-50) bc of credit to cash of 500

A credit is not the normal balance for which account listed below? A Liability account B Retained earnings C Dividends account D Common stock account E Revenue account

C Dividends account

In the first month of operations for Gallowsbird Industries, the total of the debit entries to the cash account amounted to 36,000 (16,000 investment by stockholders and revenues of 20000). The total of the credit entries to the cash account amounted to 22,000 (purchase of equipment 8000 and payment of expenses 14000) At the end of the month, the cash account has a(n) A. 6000 credit balance B. 6000 debit balance C. 14000 debit balance D. 14000 credit balance

C. 14000 debit balance 36000 (debit) - 22000 (credit) = 14000 debit balance

On Aug 13, 2015, Swell Maps Enterprises purchased equip of 1300 and supplies of 200 on account. Which of the following journal entries is recorded correctly and in the standard format? A. Acc Payable 1500 equip 1300 supplies 200 B. Equip 1300 acc payable 1500 supplies 200 C. Equip 1300 Supplies 200 Acc payable 1500 D. Equip 1300 Supplies 200 Acc payable 1500

C. Equip 1300 Supplies 200 Acc payable 1500

Beethoven Company provided consulting services and billed the client $3,100. As a result of this event, A. assets remained unchanged B. only stockholders' equity increased by 3100 C. assets and SE both increased by 3100 D. only assets increased by 3100

C. assets and SE both increased by 3100

Debit/Credit for an increase in common stock

Credit

Debit/Credit for decrease in expenses

Credit

Debit/Credit for increase in retained earnings

Credit

Debit/Credit for increase in revenues

Credit

Debit/credit for decrease in dividends

Credit

An accountant has debited an asset account for $1,000 and credited a liability account for $500. Which of the following would be an incorrect way to complete the recording of the transaction? A. credit a stockholders account for 800 B. credit another liability account for 800 C. credit an asset account for 800 D. debit a stockholders account for 800

D. debit a stockholders account for 800 1300 (debit) = 500 (credit) + X X = 800 Credit

Mt. Zion Inc. pays its employees twice a month, on the 7th and 21st. On June 21, they paid employee salaries of 5000. This transaction would: A. decrease the balance in salaries and wages expense by 5000 B. be recorded by a 5000 debit to salaries and wages payable and a 4000 credit to salaries and wages expense C. increase retained earnings by 5000 D. decrease net income for the month by 5000 E. increase stockholders' equity by 5000

D. decrease net income for the month by 5000 by paying salaries to employees, salaries expense is increased by 5000, which is reported on the income statement for the month and decreases net income for the month by 5000

The normal balance of any account is the A. right side B. left side C. side which decreases that account D. side which increases that account

D. side which increases that account

Debit/Credit for a decrease in common stock

Debit

Debit/Credit for a decrease in retained earnings

Debit

Debit/Credit for decrease in revenues

Debit

Debit/Credit for increase in expenses

Debit

Journal entry for purchasing equipment on account for $7,000

Dr. Equipment 7,000 cr. A/P 7,000

On December 20, Harold T.C. Company declared and paid a dividend of $25,000. How would Harold T.C. Company record this transaction? A no journal entry needed B Dividends expense 25,000 Cash 25,000 C Dividends 25,000 Revenue 25,000 D Cash 25,000 Dividends 25,000 E Dividends 25,000 Cash 25,000

E Of course a journal entry is needed; the company is paying out cash. Dividends are not an expense! The dividend account is increased by a debit. Cash is decreased by a credit.

t/F: The trial balance only contains accounts from the income statement.

False The trial balance includes accounts from both the balance sheet (assets, liabilities, and stockholders equity) and the income statement (revenues and expenses)

The trial balance: I. has debit balances in the left column and credit balances in the right column II. Is usually prepared at the beginning of the accounting period III. when prepared right, should have mathematically equality of debits and credits after posting IV. only contains accounts from the balance sheet

I,III The trial balance is usually prepared at the end of the accounting period and is necessary checkpoint for uncovering certain types of errors. It contains assets, liability, shareholder's equity, revenue, and expense.

what does the trial balance contain?

It contains assets, liability, shareholder's equity, revenue, and expense.

what is the general ledger?

The general ledger provides in a single location the list of transactions affecting each account and the account's balance. it is organized by account.

journal entry for billing customer $3,000 for services performed

dr.A/R 3,000 cr. Revenue 3,000

What is a trial balance?

a list of all of the accounts in the general ledger along with their debit and credit balance. Allows the company to confirm that certain kinds of errors have not been made in the recording process

What is an account?

a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item

On January 14, Edamame Industries purchased supplies of $700 on account. The entry to record the purchase will include a) a debit to supplies and a credit to accounts payable b) a debit to accounts receivable and cr to supplies c) deb to supplies and cred to cash d) deb to supplies expense and cred to acc receivable

a) a debit to supplies and a credit to accounts payable

The following transactions took place for wang company: -Purchased equipment on account for $8000 -Billed customers for $3000 for services performed -Made payments of $1500 dollars on account for equipment purchased earlier -Collected $1900 dollars on customer accounts Which of the following is true, assuming the beginning balances of accounts receivables and accounts payables is $0? a) there was an entry of debit to cash of $1,900 b) the ending balance of AR is $6,500 c) none of the statements are correct d) there was an entry of credit to equipment of $1,500 e) the ending balance of AP is $1,100

a) there was an entry of debit to cash of $1,900 AR=3,000-1,900= $1,100 AP= 8,000-1,500=$6,500 when you pay accounts payable, you debit accounts payable and credit cash when we receive the payment from customers, we debit cash and credit accounts receivable.

On September 1, 2015, promise ring co. reported stockholders' equity of $156,000. during the month, they generated revenues of $38,000, incurred expenses of $21,000, purchased equipment of $5,000, and paid dividends of $2,000. What is the amount stockholders' equity on September 30, 2015? a) $176,000 b) $166,000 c) $171,000 d) $173,000

c) $171,000 156,000+38,000-21,000-2,000

TripleQ Company received a cash of $1,100 in advance from a customer. As a result of this event, a)None of these answer choices are correct b) assets decreased by $1,100 revenue increased by $1,100 c) liabilities increased by $1,100 d) stockholders' equity increased by $1,100

c) liabilities increased by $1,100

What are the 5 subdivisions of stockholders equity?

common stock, retained earnings, dividends, revenues, and expenses

Deerhoof Company purchases equipment for $2,700 and supplies for $400 from Milkman Co. for $3,100 cash. The entry for this transaction will include a a) cred to cash for milkman b) cred to acc payable for deerhoof c) deb expenses for a total spending of $3100 for deerhoof d) deb to equipment $2700 and deb to supplies for $400 for deerhoof e) debit to equipment for $2700 and debit to supplies expense for $400 for milkman

d) debit to equipment $2700 and debit to supplies for $400 for deerhoof credit to cash

which of the following is false? a) accounts payable increases liability, so it is a credit balance account b) cash increases assets, so it is a debit balance account c) revenue increases stockholders equity, so it is a credit balance account d) dividends decreases shareholders' equity, so it is a credit balance account.

d) dividends decreases shareholders' equity, so it is a credit balance account. dividends is an expense account, so a decrease is a debit

Debit/Credit for increase in dividends

debit

when you pay accounts payable, you ___ accounts payable and ____ cash

debit; credit

A credit is a _____ in an asset or an _____ in either a liability or owners equity

decrease, increase

A debit _____ a revenue and ______ expense

decreases, increases

journal entry for making a payment of $1,400 on account for equipment purchased earlier in the month

dr. A/P cr. Cash

journal entry for collecting $2,200 on customer accounts for the services performed earlier in the month

dr. cash cr. A/R

The following transactions took place for Walden Company during the month of June: (a) Purchased equipment on account for $7,000. (b) Billed customers $3,000 for services performed (c) Made payment of $1,400 on account for equipment purchased earlier in the month. (d) Collected $2,200 on customer accounts for the services performed earlier in the month. Based on the information given, which of the statements is correct? a) The balance in account receivable is $3,000 at the end of the month b) None of these answer choices are correct c) The balance in account payable is $1,400 at the end of the month. d) Revenue increased by $2,200 for the month e) Stockholders' equity increased by $3,000

e) Stockholders' equity increased by $3,000 because of a credit in the revenue account. revenue increased by 3,000 for the month. it doesnt matter that the company only collected 2,200 from the customers. Balance in AR is 800 and AP is 4,000.

Camper Van Company purchased equipment for $2,600 cash. As a result of this event, a) stockholders' equity decreased by $2,600 b) current assets increased by $2,600 c) total assets increased by $2,600 d) stockholders' equity decreased and total assets increased by $2,600 e) total assets remained unchanged.

e) total assets remained unchanged. debit equipment 2,600 credit cash 2,600

A debit is an ______ in asset or a ______ in either a liability or owners equity

increase, decrease

A credit ______ revenue and _______ expense

increases, decreases

what are adjustment entries

journal entries that record important economic events for which there are no transactions to trigger the accountant to record them

Increases in liabilities must be entered on the right/left side and decreases must be entered on the right/left side

right; left

what does a journal entry do?

tells how the two affected accounts were changed by a transaction. They are recorded in the general journal in chronological order