Accounting - Chapter 3

The usual sequence of steps in the transaction recording process is

analyze, journalize, post to the ledger.

The purchase of an asset for cash

leaves total assets unchanged

During February 2017, its first month of operations, the owner of Blossom Company invested cash of $118000. Blossom had cash sales of $23600 and paid expenses of $41300. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?

$100300 debit

Wildhorse Co. began the year with $136100 in its Common Stock account and a debit balance in Retained Earnings of $58300. During the year, the company earned net income of $29200 and declared and paid $9700 of dividends. In addition, the company sold additional common stock amounting to $35600. Based on this information, what should the transaction analysis show for the ending total of all stockholders' equity accounts?

$132,900

In the first month of operations, the total of the debit entries to the Cash account amounted to $6440 and the total of the credit entries to the Cash account amounted to $3680. The Cash account has a

$2760 debit balance.

At September 1, 2017, Pharoah Company reported Retained Earnings of $524520. During the month, Pharoah generated revenues of $74400, incurred expenses of $44640, purchased equipment for $18600 and paid dividends of $7440. What is the balance in Retained Earnings at September 30, 2017?

$546840 credit (equipment is not retained earnings - it is an asset)

An awareness of the normal balances of accounts would help you spot which of the following as an error in recording?

A credit balance in an expense account

Which of the following correctly identifies normal balances of accounts?

Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Debit

Decrease in Accounts Receivable

Credit

Decrease in Salaries and Wages Expense

Credit

Decrease in Supplies

Credit

Increase in Common Stock

Credit

Increase in Revenues

Credit

Increase in Unearned Rent Revenue

Credit

Decrease in Interest Payable

Debit

Decrease in Notes Payable

Debit

Increase in Dividends

Debit

Increase in Prepaid Insurance

Debit

Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?

Dividends and Interest Revenue

A trial balance will not balance if

a $50 cash dividend is debited to dividends for $500 and credited to cash for $50.

The principal purpose of posting is to

accumulate the effects of journalized transactions in the individual accounts.

Equipment costing $15600 is purchased by paying $3900 cash and signing a note payable for the remainder. The journal entry should include a

credit to Notes Payable.

A company that receives money in advance of performing a service

debits Cash and credits Unearned Service Revenue.

An expense

decreases stockholders' equity

A journal

provides a chronological record of all transactions

Which of the following describes the classification and normal balance of the Retained Earnings account?

stockholders equity, credit

If services are rendered on account, then

stockholders' equity will increase

A trial balance proves

the mathematical equality of debits and credits after the posting process

Novak Corp. purchased equipment for $2200 cash. As a result of this event,

total assets remained unchanged.

When collection is made on Accounts Receivable

total assets will remain the same