accounting ch2

Assume that Sallisaw Sideboards, Inc. had a retained earnings balance of $10,000 on April 1, and that the company had the following transactions during April. Issued common stock for cash, $5,000. Provided services to customers on account, $2,000. Provided services to customers in exchange for cash, $900. Purchased equipment and paid cash, $4,300. Paid April rent, $800. Paid employee salaries for April, $700. What was Sallisaw's retained earnings balance at the end of April? a. $11,400. b. $12,100. c. $16,400. d. Some other amount.

$11,400.

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January: 1. Issued 10,000 shares of common stock for $15,000 cash. 2. Purchased land for $12,000, signing a note payable for the full amount. 3. Purchased office equipment for $1,200 cash. 4. Received cash of $14,000 for services provided to customers during the month. 5. Purchased $300 of office supplies on account. 6. Paid employees $10,000 for their first month's salaries. What was the total amount of Gotebo's liabilities following these six transactions? a. $12,300. b. $27,300. c. $22,600. d. $15,500.

$12,300.

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January: 1. Issued 10,000 shares of common stock for $15,000 cash. 2. Purchased land for $12,000, signing a note payable for the full amount. 3. Purchased office equipment for $1,200 cash. 4. Received cash of $14,000 for services provided to customers during the month. 5. Purchased $300 of office supplies on account. 6. Paid employees $10,000 for their first month's salaries. What was the balance of Gotebo's Cash account following these six transactions? a. $29,800. b. $19,300. c. $17,800. d. $22,400. Feedback: Cash = ($15,000 - $1,200 + $14,000 - $10,000) = $17,800.

$17,800

If the liabilities of a company increased by $55,000 during a month and the stockholders' equity decreased by $21,000 during that same month, did assets increase or decrease and by how much? a. $34,000 increase. b. $55,000 increase. c. $34,000 decrease. d. $76,000 increase. Feedback: Increase in Liabilities ($55,000) - Decrease in Stockholders' Equity ($21,000) = Increase in Assets ($34,000).

$34,000 increase.

The Accounts Receivable account has a beginning balance of $10,000 and the company provides services of $50,000 on account during the month. The ending balance was $12,000. How much did the company receive from customers during the month? a. $50,000. b. $52,000. c. $48,000. d. $62,000. Feedback: $10,000 + $50,000 $12,000 = $48,000.

$48,000.

The Accounts Payable account has a beginning balance of $12,000 and the company purchased $50,000 of supplies on account during the month. The ending balance was $10,000. How much did the company pay to creditors during the month? a. $50,000. b. $52,000. c. $60,000. d. $62,000. Feedback: $12,000 + $50,000 $10,000 = $52,000

$52,000.

On March 3, Cobra Inc. purchased a desk for $450 on account. On March 22, Cobra purchased another desk for $500 also on account, and then on March 24, Cobra paid $400 on account. At the end of March, what amount should Cobra report for desks (assuming these two desks were the only desks they had)? a. $50. b. $450. c. $500. d. $950

$950

The following amounts are reported in the ledger of Mariah Company: Assets $80,000 Liabilities 36,000 Retained Earnings 12,000 What is the balance in the Common Stock account? a. $44,000. b. $32,000. c. $48,000. d. $42,000. Assets = Liabilities + Stockholder's Equity (retained earnings + common stock) 80,000 = 36,000 + (12,000 + x)

32,000

The owner of an office building should report rent collected in advance as a debit to Cash and a credit to: a. A liability. b. An asset other than Cash. c. Revenue. d. Stockholders' equity.

A liability.

An account receivable can best be defined as: a. A payment to the owners. b. A sale of goods and services. c. A resource owned by the company. d. An amount owed by the company.

A resource owned by the company

The full set of procedures used to accomplish the FN Measurement/communication process of financial accounting is referred to as the: a. Trial balance b. Accounting cycle c. Chart of accounts d. General ledger

Accounting Cycle

On July 5, Harris Company purchased supplies from the hardware store for $600 on account. On July 10, Harris receives a bill from the hardware store as a reminder about the account balance. On July 17, Harris pays the account in full. How does Harris record the transaction on July 17? a. Supplies 600 Accounts Payable 600 b. Accounts Payable 600 Supplies 600 c. Cash 600 Accounts Payable 600 d. Accounts Payable 600 Cash 600

Accounts Payable 600 Cash 600

Which of the following accounts would normally have a credit balance? a. Accounts Payable, Service Revenue, Common Stock. b. Salaries Payable, Unearned Revenue, Delivery Expense. c. Income Tax Payable, Service Revenue, Dividends. d. Cash, Repairs and Maintenance Expense, Dividends.

Accounts Payable, Service Revenue, Common Stock.

Amounts owed to suppliers for supplies purchased on account are defined as: a. Cash. b. Accounts Receivable. c. Accounts Payable. d. Supplies Expense.

Accounts Payable.

Which of the following accounts would normally have a debit balance and appear in the balance sheet? a. Accounts Receivable. b. Unearned Revenue. c. Salaries Expense. d. Dividends.

Accounts Receivable.

Which of the following is not an asset account? a. Supplies. b. Accounts Payable. c. Equipment. d. Accounts Receivable.

Accounts payable

A trial balance can best be explained as a list of: a. The income statement accounts used to calculate net income. b. Revenue, expense, and dividend accounts used to show the balances of the components of retained earnings. c. The balance sheet accounts used to show the equality of the accounting equation. d. All accounts and their balances at a particular date.

All accounts and their balances at a particular date.

Providing services to customers on account would affect the balances reported in which financial statement(s)? a. Income statement b. Statement of stockholders' equity c. Balance sheet d. All of the financial statements would be affected

All of the financial statements would be affected

For each transaction recorded in an accounting system, the basic equation that must be maintained at all times is: a. Assets = Liabilities + Stockholders' Equity. b. Cash Increases = Cash Decreases. c. Revenues = Expenses + Dividends. d. Assets = Liabilities.

Assets = Liabilities + Stockholders' Equity.

When a payment is made on an account payable: a. Assets and stockholders' equity decrease. b. Assets and liabilities decrease. c. Liabilities and revenues decrease. d. Assets and expenses decrease.

Assets and liabilities decrease.

On September 30, MFP Co. paid employee salaries of $7,000, including $1,000 it owed to its employees last month. What are the effects of this transaction on the accounting equation? a. Expenses increased, liabilities increased, and assets increased. b. Assets decreased, liabilities decreased, and expenses increased. c. Assets decreased, expenses decreased, and liabilities increased. d. Expenses decreased, liabilities decreased, and assets decreased. e. Assets increased, expenses increased, and liabilities decreased.

Assets decreased, liabilities decreased, and expenses increased.

Investments by stockholders have what effect on the accounting equation? a. Assets increase and liabilities increase. b. Expenses increase and liabilities increase. c. Assets increase and revenues increase. d. Assets increase and stockholders' equity increases.

Assets increase and stockholders' equity increases.

When a company issues common stock for cash, what is the effect on the accounting equation for the company? a. Assets increase and liabilities increase. b. Assets increase and stockholders' equity increases. c. Assets decrease and liabilities decrease. d. Liabilities decrease and stockholders' equity increases.

Assets increase and stockholders' equity increases.

When a company provides services on account, the accounting equation would be affected as follows: a. Assets increase. b. Revenues increase. c. Assets increase and liabilities decrease. d. Assets increase and stockholders' equity increases.

Assets increase and stockholders' equity increases.

Which of the accounts are increased with a debit and decreased with a credit? a. Liabilities, stockholders' equity, and revenues. b. Dividends, liabilities, and assets. c. Expenses, dividends, and stockholders' equity. d. Assets, dividends, and expenses.

Assets, dividends, and expenses.

The Unearned Revenue account is shown in which statement? a. Income statement. b. Statement of cash flows. c. Balance sheet. d. Statement of stockholders' equity.

Balance sheet.

Lithuanian Motors has the following balance sheet accounts: Land $170,000 Equipment 66,000 Salaries Payable ? Notes Payable 88,000 Supplies 14,000 Cash 26,000 Common Stock 100,000 Retained Earnings 40,000 Accounts Payable ? Prepaid Rent 12,000 If the company has total assets of $288,000, what is the balance of the company's Salaries Payable account? a. $15,000. b. $25,000. c. $12,000. d. Cannot be determined given the information provided. Feedback: Total liabilities + Stockholders' equity = ($288,000) = Accounts Payable (?) + Salaries Payable (?) + Notes Payable ($88,000) + Common Stock ($100,000) + Retained Earnings ($40,000); therefore, with two unknowns there is not enough information to solve the problem.

Cannot be determined given the information provided.

When cash payments are made to stockholders, what is the effect on the company's accounts? a. Cash decreases and dividends increase. b. Cash increases and dividends decrease. c. Cash decreases and common stock decreases. d. Cash increases and common stock increases.

Cash decreases and dividends increase.

Which of the following accounts would normally have a debit balance? a. Accounts Payable, Service Revenue, Common Stock. b. Salaries Payable, Unearned Revenue, Utilities Expense. c. Income Tax Payable, Service Revenue, Dividends. d. Cash, Delivery expense, Dividends.

Cash, Delivery expense, Dividends.

Which one of the following accounts will have a credit balance? a. Dividends b. Salary Expense c. Supplies d. Common Stock

Common Stock

Tomlin & Company provides music for special occasions. On January 14, the Smith family hired Tomlin for an upcoming family wedding for an agreed upon fee of $10,000. The wedding was scheduled for May 23. As part of the agreement, the Smiths paid Tomlin half of the fee at the end of April with the remaining amount due by the end of June. How would Tomlin record the receipt of the final payment in June? a. Credit to Accounts Receivable. b. Credit to Service Revenue. c. Credit to Cash. d. Debit to Unearned Revenue.

Credit to Accounts Receivable.

Tyler Incorporated receives $150,000 from investors in exchange for shares of its common stock. Tyler Incorporated records this transaction with a: a. Debit to Investments. b. Credit to Retained Earnings. c. Credit to Common Stock. d. Credit to Service Revenue.

Credit to Common Stock.

Xenon Corporation borrows $75,000 from First Bank. Xenon Corporation records this transaction with a: a. Debit to Investments. b. Credit to Retained Earnings. c. Credit to Notes Payable. d. Credit to Interest Expense.

Credit to Notes Payable.

Liabilities normally carry a _______ balance and are shown in the ______________. a. Debit; Statement of stockholders' equity. b. Debit; Income statement. c. Credit; Balance sheet. d. Debit; Balance Sheet.

Credit; Balance sheet.

Clement Company paid an account payable related to a previous utility bill of $1,000. This transaction should be recorded as follows on the payment date: a. Debit Accounts Payable $1,000, credit Cash $1,000. b. Debit Cash $1,000, credit Accounts Payable $1,000. c. Debit Utilities Expense $1,000, credit Cash $1,000. d. Debit Cash $1,000, credit Utilities Expense $1,000.

Debit Accounts Payable $1,000, credit Cash $1,000.

Childers Service Company provides services to customers totaling $3,000, for which it billed the customers. How would the transaction be recorded? a. Debit Cash $3,000, credit Service Revenue $3,000. b. Debit Accounts Receivable $3,000, credit Service Revenue $3,000. c. Debit Accounts Receivable $3,000, credit Cash $3,000. d. Debit Service Revenue $3,000, credit Accounts Receivable $3,000.

Debit Accounts Receivable $3,000, credit Service Revenue $3,000.

A company received a bill for newspaper advertising services, $400. The bill will be paid in 10 days. How would the transaction be recorded today? a. Debit Advertising Expense $400, credit Accounts Payable $400. b. Debit Accounts Payable $400, credit Advertising Expense $400. c. Debit Accounts Payable $400, credit Cash $400. d. Debit Advertising Expense $400, credit Cash $400.

Debit Advertising Expense $400, credit Accounts Payable $400.

Bostel wanted to expand the size of its warehouse in order to generate more profits. The company decided to purchase the building adjacent to its existing warehouse. The company pays for the building by borrowing from the bank. The purchase would be recorded as: a. Debit Cash; credit Notes Payable. b. Debit Buildings; credit Cash. c. Debit Buildings; credit Notes Payable. d. Debit Cash and Buildings; credit Notes Payable.

Debit Buildings; credit Notes Payable.

On July 7, Saints Inc. received $10,000 in cash from a customer for services to be provided on October 10. Which of the following describes how the transaction should be recorded on July 7? a. Debit Cash $10,000, credit Service Revenue $10,000. b. Debit Accounts Receivable $10,000, credit Service Revenue $10,000. c. Debit Cash $10,000, credit Unearned Revenue $10,000. d. Debit Unearned Revenue $10,000, credit Cash $10,000.

Debit Cash $10,000, credit Unearned Revenue $10,000.

On July 31, ALOE Inc. received $5,000 cash from a customer who previously purchased ALOE's products on account. What entry should ALOE Inc. record at the time it receives cash? a. Debit Accounts Receivable, $5,000; credit Cash, $5,000. b. Debit Cash, $5,000; credit Accounts Receivable, $5,000. c. Debit Cash, $5,000; credit Accounts Payable, $5,000. d. Debit Cash, $5,000; credit Service Revenue, $5,000.

Debit Cash, $5,000; credit Accounts Receivable, $5,000.

Styleson Inc. performed cleaning services for its customers for cash. These transactions would be recorded as: a. Debit Service Revenue, credit Cash. b. Debit Cash, credit Service Revenue. c. Debit Cash, credit Accounts Receivable. d. Debit Accounts Receivable, credit Service Revenue.

Debit Cash, credit Service Revenue.

Summer Leasing received $12,000 for 24 months rent in advance. How should Summer record this transaction? a. Debit Prepaid Rent; credit Rent Expense. b. Debit Cash; credit Unearned Revenue. c. Debit Cash; credit Service Revenue. d. Debit Rent Expense; credit Cash.

Debit Cash; credit Unearned Revenue.

When a company pays $2,500 dividends to its stockholders, the transaction should be recorded as: a. Debit Cash; credit Dividends. b. Debit Retained Earnings; credit Dividends. c. Debit Dividends; credit Cash. d. Debit Dividends; credit Accounts Payable.

Debit Dividends; credit Cash.

Schooner Inc. purchased equipment by signing a note payable. This transaction would be recorded as: a. Debit Equipment, credit Cash. b. Debit Cash, credit Notes Payable. c. Debit Notes Payable, credit Equipment. d. Debit Equipment, credit Notes Payable.

Debit Equipment, credit Notes Payable.

Assume that $18,000 cash is paid for insurance to cover the next year. The appropriate debit and credit are: a. Debit Insurance Expense $18,000, credit Prepaid Insurance $18,000. b. Debit Prepaid Insurance $18,000, credit Insurance Expense $18,000. c. Debit Prepaid Insurance $18,000, credit Cash $18,000. d. Debit Cash $18,000, credit Prepaid Insurance $18,000.

Debit Prepaid Insurance $18,000, credit Cash $18,000.

Assume that cash is paid for rent to cover the next year. The appropriate debit and credit are: a. Debit Rent Expense, credit Cash. b. Debit Prepaid Rent, credit Rent Expense. c. Debit Prepaid Rent, credit Cash. d. Debit Cash, credit Prepaid Rent.

Debit Prepaid Rent, credit Cash.

Daniel Dino Restaurant owes employee salaries of $15,000. This would be recorded as: a. Debit Salaries Expense, credit Cash. b. Debit Salaries Payable, credit Cash. c. Debit Salaries Expense, credit Salaries Payable. d. Debit Salaries Payable, credit Salaries Expense.

Debit Salaries Expense, credit Salaries Payable.

Sooner purchased office supplies on account. The transaction would be recorded as: a. Debit Supplies, Credit Cash b. Debit Cash, Credit Accounts Payable c. Debit Accounts Payable, Credit Supplies d. Debit Supplies, Credit Accounts Payable

Debit Supplies, Credit Accounts Payable

When a company pays utilities of $1,800 in cash, the transaction is recorded as: a. Debit Utilities Expense $1,800, credit Utilities Payable $1,800. b. Debit Utilities Payable $1,800, credit Cash $1,800. c. Debit Cash $1,800, credit Utilities Expense $1,800. d. Debit Utilities Expense $1,800, credit Cash $1,800.

Debit Utilities Expense $1,800, credit Cash $1,800.

Jerome purchased a building for his business by signing a note to be repaid over the next ten years. Which of the following correctly describes how to record this transaction? a. Debit assets, credit liabilities. b. Debit assets, credit stockholders' equity. c. Debit liabilities, credit assets. e. Debit expenses, credit liabilities.

Debit assets, credit liabilities.

Which of the following is not a possible journal entry? a. Credit assets; Debit expenses. b. Debit assets; Debit stockholders' equity. c. Credit revenues; Debit assets. d. Debit expenses; Credit liabilities.

Debit assets; Debit stockholders' equity.

Providing services on account would be recorded with a: a. Debit to Service Revenue. b. Credit to Accounts Receivable. c. Credit to Accounts Payable. d. Debit to Accounts Receivable.

Debit to Accounts Receivable.

Expenses normally carry a _______ balance and are shown in the ______________. a. Debit; Statement of stockholders' equity. b. Debit; Income statement. c. Credit; Balance sheet. d. Debit; Balance Sheet.

Debit; Income statement.

Dividends normally carry a _______ balance and are shown in the ______________. a. Debit; Statement of stockholders' equity. b. Debit; Income statement. c. Credit; Balance sheet. d. Debit; Balance Sheet.

Debit; Statement of stockholders' equity.

Incurring an expense for advertising on account would be recorded by: a. Debiting liabilities. b. Crediting assets. c. Debiting an expense. d. Debiting assets.

Debiting an expense.

When the company pays stockholders a dividend, what is the effect on the accounting equation for that company? a. Decrease stockholders' equity and increase assets. b. Increase liabilities and increase assets. c. Decrease assets and decrease liabilities. d. Decrease assets and decrease stockholders' equity.

Decrease assets and decrease stockholders' equity.

Which of the following is possible for a particular business transaction? a. Increase assets; Decrease liabilities b. Decrease assets; Increase assets c. Decrease assets; Increase stockholders' equity d. Decrease liabilities; Increase expenses

Decrease assets; Increase assets

An expense has what effect on the accounting equation? a. Decrease liabilities. b. Decrease stockholders' equity. c. Increase assets. d. No effect.

Decrease stockholders' equity.

The following statements pertain to recording transactions. Which of them are true? I. Total debits should equal total credits. II. It is possible to have multiple debits or credits in one journal entry. III. Assets are always listed first in journal entries. IV. Some journal entries will have debits only. a. I only. b. I and II. c. I, II, and IV. d. II, III, and IV.

I and II.

Which of the following is true about a "credit"? I. It is part of the double-entry procedure that keeps the accounting equation in balance. II. It represents a decrease to assets. III. It represents an increase to liabilities. IV. It is on the right side of a T-account. a. I and II. b. IV only. c. I, II, and III. d. I, II, III, and IV.

I, II, III, and IV.

Which of the following is true about a "debit"? I. It is part of the double-entry procedure that keeps the accounting equation in balance. II. It represents an increase to assets. III. It represents a decrease to liabilities. IV. It is on the right side of a T-account. a. I and II. b. IV only. c. I, II, and III. d. I, II, III, and IV.

I, II, and III.

Which of the following accounts has a credit balance? a. Salaries Expense. b. Income Tax Payable. c. Land. d. Prepaid Rent.

Income Tax Payable.

Which of the following is NOT possible for a business transaction a. Increase assets and decrease revenue. b. Decrease assets and increase expense. c. Increase liabilities and increase expense. d. Decrease liabilities and increase revenue.

Increase assets and decrease revenue.

Purchasing office supplies on account will: a. Not change assets. b. Increase assets and decrease liabilities. c. Increase assets and increase liabilities. d. Increase assets and increase stockholders' equity.

Increase assets and increase liabilities.

Providing services and receiving cash will: a. Increase assets and increase stockholders' equity. b. Increase assets and increase liabilities. c. Decrease assets and increase liabilities. d. Decrease liabilities and increase stockholders' equity.

Increase assets and increase stockholders' equity.

Revenues have what effect on the accounting equation? a. Increase liabilities. b. Decrease assets. c. Increase stockholders' equity. d. No effect.

Increase stockholders' equity.

Receiving cash from an account receivable: a. Increases revenue and decreases an asset. b. Decreases a liability and increases an asset. c. Increases an asset and increases revenue. d. Increases one asset and decreases another asset.

Increases one asset and decreases another asset.

Which of the following is not possible when recording a transaction? a. Liabilities increase and assets decrease. b. Stockholders' equity increases and assets increase. c. One asset increases and another asset decreases. d. Stockholders' equity decreases and assets decrease.

Liabilities increase and assets decrease.

Purchasing office equipment on account has what impact on the accounting equation? a. Stockholders' equity decreases and assets increase. b. Liabilities increase and assets increase. c. Assets decrease and liabilities decrease. d. Assets increase and stockholders' equity increases.

Liabilities increase and assets increase.

Which of the accounts are decreased on the debit side and increased on the credit side? a. Liabilities, stockholders' equity, and revenues. b. Dividends, liabilities, and assets. c. Expenses, dividends, and stockholders' equity. d. Assets, dividends, and expenses.

Liabilities, stockholders' equity, and revenues.

A trial balance represents the: a. Source documents used to determine the effects of transactions on the company's accounts. b. List of all accounts and their balances at a particular date to ensure that debits equal credits. c. Chronological record of all transactions affecting the company. d. Process of transferring debit and credit information from the journal to the accounts in the general ledger.

List of all accounts and their balances at a particular date to ensure that debits equal credits.

When a company pays cash for equipment, what is the effect on the accounting equation for that company? a. Increase assets and inrease liabilities. b. Decrease assets and decrease liabilities. c. No change. d. Increase assets and increase stockholders' equity. Feedback: One asset (equipment) increases while another asset (cash) decreases.

No change.

Purchasing supplies for cash has what effect on the accounting equation? a. Increase assets. b. Decrease stockholders' equity. c. Decrease liabilities. d. No effect.

No effect.

On January 1, Brad Inc. sold $30,000 in products to a customer on account. Then on January 10, Brad collected the cash on that account. What is the impact on Brad's accounting equation from the collection of cash on January 10? a. No net effect to the accounting equation. b. Assets increase and liabilities decrease. c. Assets decrease and liabilities decrease. d. Assets increase and stockholders' equity increases.

No net effect to the accounting equation.

Pumpkin Inc. sold $500 in pumpkins to a customer on account on January 1. On January 11 Pumpkin collected the cash from that customer. What is the impact on Pumpkin's accounting equation from the collection of cash? a. No net effect to the accounting equation. b. Decrease assets and increase liabilities. c. Increase assets and increase liabilities. d. Decrease assets and decrease liabilities.

No net effect to the accounting equation.

On December 1, Bears Inc. signed a contract with a retailer to supply maintenance for the next calendar year. How should this transaction be recorded on December 1? a. Debit Cash, credit Service Revenue. b. Debit Cash, credit Accounts Receivable. c. Debit Accounts Receivable, credit Service Revenue. d. No transaction should be recorded on December 1.

No transaction should be recorded on December 1.

Consider the following accounts: Dividends Insurance Expense Cash Service Revenue How many of these accounts are increased with credits? a. One. b. Two. c. Three. d. Four.

One.

Consider the following accounts: Utilities Expense Accounts Payable Service Revenue Common Stock How many of these accounts are increased with debits? a. One. b. Two. c. Three. d. Four. Feedback: Utilities Expense.

One.

Consider the following transactions: Issued common stock for cash. Purchased equipment by signing a note payable. Provided services to customers on account. Collected cash from customers on account. How many of these four transactions increased the given company's total liabilities? a. One. b. Two. c. Three. d. Four.

One.

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January: 1. Issued 10,000 shares of common stock for $15,000 cash. 2. Purchased land for $12,000, signing a note payable for the full amount. 3. Purchased office equipment for $1,200 cash. 4. Received cash of $14,000 for services provided to customers during the month. 5. Purchased $300 of office supplies on account. 6. Paid employees $10,000 for their first month's salaries. How many of these transactions decreased Gotebo's total assets? a. One. b. Two. c. Three. d. Four.

One.

Which of the following transactions causes a decrease in stockholders' equity? a. Pay dividends to stockholders. b. Obtain cash by borrowing from a local bank. c. Provide services to customers on account. d. Purchase office equipment for cash.

Pay dividends to stockholders.

Which of the following transactions would cause a decrease in both assets and stockholders' equity? a. Paying insurance premium for the next two years. b. Purchasing office equipment on account. c. Paying advertising for the current month. d. Providing installation services to customers.

Paying advertising for the current month.

Which step in the process of measuring external transactions involves assessing the equality of total debits and total credits? a. Use source documents to determine accounts affected by the transaction. b. Prepare a trial balance. c. Analyze the impact of the transaction on the accounting equation. d. Post the transaction to the T-account in the general ledger.

Prepare a trial balance

Which of the following transactions would cause an increase in both the assets and liabilities of a company? a. Paying for the current month's rent. b. Pay for inventory purchased 90 days ago. c. Purchase of a building by issuing a note payable. e. Services received on account. Feedback: One asset (building) and one liability (note payable) increases.

Purchase of a building by issuing a note payable.

Which of the following would increase assets and increase liabilities? a. Provide services to customers on account. b. Purchase office supplies on account. c. Pay dividends to stockholders. d. Receive a utility bill but do not pay it immediately.

Purchase office supplies on account.

Which of the following accounts has a debit balance? a. Accounts Payable. b. Unearned Revenue. c. Service Revenue. d. Salaries Expense.

Salaries Expense.

Consider the following list of accounts: Cash Retained Earnings Service Revenue Utilities Expense Salaries Expense Accounts Receivable Accounts Payable Common Stock Equipment Dividends How many of these accounts have a normal debit balance? a. Four. b. Five. c. Six. d. Seven. Feedback: Cash, Salaries Expense, Equipment, Utilities Expense, Accounts Receivable, Dividends.

Six.

When a company incurs employee salaries but does not pay them, how will the basic accounting equation be affected? a. Stockholders' equity decreases. b. Revenues decrease. c. Expenses decrease. d. Liabilities decrease

Stockholders' equity decreases.

If a company provides services on account, which of the following is true? a. Expenses increase. b. Liabilities increase. c. Stockholders' equity increases. d. Assets decrease.

Stockholders' equity increases.

A company receives a $50,000 cash deposit from a customer on October 15 but will not provide services until November 20. Which of the following statements is true? a. The company records service revenue on October 15. b. The company records cash collection November 20. c. The company records unearned revenue on October 15. d. The company records nothing on October 15.

The company records unearned revenue on October 15.

Consider the following list of accounts: Accounts Payable Cash Prepaid Rent Common Stock Salaries Payable Equipment Supplies Rent Expense How many of these accounts have a normal credit balance? a. Two. b. Three. c. Four. d. Five. Feedback: Accounts Payable, Common Stock, Salaries Payable.

Three.

Posting transactions to T-accounts involve: a. Analyzing source documents to determine the effects of transactions on the company's accounts. b. Listing all accounts and their balances at a particular date to ensure that debits equal credits. c. Preparing a chronological record of all transactions affecting the company. d. Transferring debit and credit information from the journal to the accounts in the general ledger.

Transferring debit and credit information from the journal to the accounts in the general ledge

Posting is the process of: a. Analyzing the impact of the transaction on the accounting equation. b. Obtaining information about external transactions from source documents. c. Transferring the debit and credit information from the journal to individual accounts in the general ledger. d. Listing all accounts and their balances at a particular date.

Transferring the debit and credit information from the journal to individual accounts in the general ledger.

Consider the following transactions: Issued common stock for cash. Purchased equipment by signing a note payable. Paid rent for the current month. Collected cash from customers on account. How many of these four transactions increased the given company's total assets? a. One. b. Two. c. Three. d. Four.

Two.

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January: 1. Issued 10,000 shares of common stock for $15,000 cash. 2. Purchased land for $12,000, signing a note payable for the full amount. 3. Purchased office equipment for $1,200 cash. 4. Received cash of $14,000 for services provided to customers during the month. 5. Purchased $300 of office supplies on account. 6. Paid employees $10,000 for their first month's salaries. How many of these transactions increased Gotebo's liabilities? a. Four. b. Three. c. Two. d. One.

Two.

How many of the following events would require an expense to be recorded? Ordering office supplies Hiring a receptionist Paying employee salaries for the current month Receiving but not paying a current utility bill Paying for insurance in advance a. One. b. Two. c. Three. d. Four.

Two.

Receiving assets from customers before services are performed results in: a. Prepaid Assets. b. Service Revenue. c. Unearned Revenues. d. Accounts Receivable.

Unearned Revenues.

. External events include all of the following except: a. Paying employees' salaries. b. Purchasing equipment. c. Using office supplies. d. Collecting an account receivable.

Use office supplies

"Record revenue in the period in which it's earned" is the definition of which principle in accounting? a. Trial balance. b. Debits and credits. c. Revenue recognition. d. Accounting equation.

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