ACG assignment 2
Select all that apply If a transaction decreases cash by $100, the balance sheet will balance if which of the following occurs? (Select all that apply)
-Another asset is increased -A liability is decreased
Select all that apply Shriver Corp. borrows $25,000 from a bank and signs a two-year promissory note. What accounts will be affected by this transaction and what is the effect?
-Cash increases -Notes payable increases
Select all that apply London Corp. issues 1,000 shares of stock for $20 per share. What are the effects of this transaction?
-Cash is increased. -Common stock is increased.
Select all that apply Jeremy issues 5,000 shares of common stock for $10 per share. Which of the following accounts are affected? (Select all that apply.)
-Common stock -Cash
Select all that apply Pluto Inc. borrows $3,000 from Second National Bank by signing a promissory note. Recording this transaction will include which of the following?
-Debit cash -Credit note payable
Select all that apply Farmer, Inc. purchases a tractor for $80,000 cash. Recording this transaction will require which of the following?
-Debit equipment -Credit cash
Select all that apply Geo Corporation issues stock to investors for $100,000. Recording this transaction will include which of the following?
-Debit to cash -Credit common stock
Select all that apply What are the effects of providing services on account to customers?
-Increase assets -Increase retained earnings
Select all that apply Price Company provides cleaning services to customers for $10,000 cash. What are the effects of this transaction on the accounting equation? (Select all that apply.)
-Increase retained earnings -Increase assets
Select all that apply Which of the following are stockholder equity accounts?
-Retained earnings -Common stock
Select all that apply Indicate which situations would require Zenda Company to record revenue in the current period. (Select all that apply.)
-Zenda performs services on account. -Zenda performs services for cash.
Select all that apply The two roles of financial accounting are to:
-communicate information to external parties for decision making purposes. -measure business activities of the company
Select all that apply Roland Corporation borrows $10,000 from the bank by signing a promissory note. Recording this transaction will include:
-credit to notes payable -debit to cash
Select all that apply The types of accounts which affect retained earnings are
-dividends. -expenses. -revenues.
Select all that apply The type of information included in an account includes
-the account title. -columns for debits and credits.
Accounts receivable are assets which represent
Amounts owed by customers
The accounting equation is:
Assets = Liabilities + Stockholders' Equity
In a double-entry accounting system, a(n)-- represents the left side of the account.
Blank 1: debit
A(n)-- transaction involves an exchange between the company and a separate economic entity. (Enter one word per blank)
Blank 1: external
A transaction is initially recorded in the journal, and then subsequently posted to the general--
Blank 1: ledger
An increase in revenues increases---- , which increases retained earnings, which increases stockholders' equity. (Enter one word per blank)
Blank 1: net Blank 2: income
The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as-- . (Enter only one word.)
Blank 1: posting or post
Consistent with the-- recognition principle, companies record revenue at the time goods are provided to customers. (Enter only one word.)
Blank 1: revenue
A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n----
Blank 1: trial Blank 2: balance
Analysis of Mueller Company's accounts show that as a result of a single transaction, both cash and notes payable increased by $10,000. Which of the following transactions would have caused this increase?
Borrowing cash and signing a promissory note
The last step for analyzing the effect of transactions is:
Confirm that assets are equal to liabilities plus stockholders' equity
Porter Company pays for three years of rent in advance. Which of the following is used to record this transaction?
Debit prepaid rent; credit cash.
Resnick purchases supplies on account. Which of the following is used to record this transaction?
Debit supplies; credit accounts payable
Torrence purchases supplies for cash. Which of the following is used to record this transaction?
Debit supplies; credit cash.
What is the effect of dividends on retained earnings?
Decrease
What is the effect of expenses on retained earnings?
Decrease
The first step for analyzing the effect of transactions is:
Determine one account in the accounting equation that will increase or decrease
True or false: A ledger provides a chronological record of all transactions affecting the firm.
False
True or false: A balance sheet is a list of all accounts and their balances showing that debits equals credits.
False Reason: A trial balance is a list of all accounts and their balances showing debits equals credits. A balance sheet presents assets, liabilities, and stockholders' equity.
True or false: The two functions of financial accounting are to measure business activities and prepare tax returns.
False Reason: The two functions of financial accounting are to measure business activities and communicate those measurements to external parties for decision-making purposes.
Which of the following contains a list of transactions affecting each account and the account's balance?
General ledger
When services are provided on account, what is the effect on stockholders' equity?
Increase
LMN Enterprises performs accounting services for a client for $3,000 cash. What is the effect on the accounting equation?
Increase assets and increase retained earnings
What effect does revenue have on retained earnings?
Increases
What is the effect of net income on retained earnings?
Increases retained earnings
Analyze the following journal entry. What is the transaction that required this entry?
Issue stock to investors
Which of the following represents a common advantage of a computerized accounting system?
Journal entries are instantly posted to the ledger
Which of the following includes the list of transactions affecting each individual account and the account's balance?
Ledger
Analyze the following t-accounts. What is the transaction that required the posting of item (4)?
Pay rent in advance
Analyze the following journal entry. What is the transaction that required this journal entry?
Purchase equipment for cash
Analyze the following journal entry. What is the transaction that required this entry?
Purchase supplies on account
Jonathan Company's journal shows a debit to supplies and a credit to accounts payable. This means that Jonathan:
Purchased supplies on account
What are the three components of retained earnings?
Revenues, expenses, and dividends
True or false: An external transaction is a transaction the firm conducts with a separate economic entity.
True Reason: An external transaction occurs with a separate economic entity.
True or false: The accounting equation must always remain in balance.
True Reason: In a double entry system, debits must equal credits, and the balance sheet must always balance.
A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.
account; general ledger
Accounts receivable are
assets
Smith Company's journal shows a debit to cash and a credit to notes payable, both for $15,000. This indicates that Smith Company:
borrowed $15,000 cash and signed a note
Analyze the following t-accounts. The transaction that required the posting for item (2) is
borrowing cash from the bank.
The two components of stockholders' equity are
common stock and retained earnings
Carnival Company issues common stock to investors for $50,000. Which of the following is used to record this transaction?
debit cash/credit common stock
Sinclair purchased equipment for $100,000 cash. Recording this transaction would include a
debit to equipment
Lassiter Industries purchased equipment for $140,000. Lassiter expects to use the equipment over the next 10 years. Recording this transaction would include a
debit to equipment $140,000.
An account should have an account title, account number, a place for the date of the transaction, and two columns for
debits and credits.
A t-account has space at the top for the account title and two sides for recording ______ and ______ to the account.
debits; credits
Expenses will cause retained earnings to
decrease
Dividends paid to stockholders will cause retained earnings to
decrease.
Which type of account is increased with a debit?
expense
Revenues cause retained earnings to
increase
Net income ______ retained earnings.
increases
Klick's journal shows a debit to cash and a credit to common stock. This journal entry indicates that Klick:
issued shares to stockholders
A chronological record of all economic events affecting a firm are recorded in a(n)
journal
A debit is on the ______ side of the account.
left
Stockholders' equity is increased by revenues because revenues increase
net income.
Gondel Company's journal shows a debit to prepaid rent and a credit to cash. This means that Gondel Company
paid rent in advance.
The process of transferring information from the journal to the ledger is referred to as
posting.
Pilot Company pays for two years of rent in advance. Recording this transaction would include a debit to
prepaid rent
The purpose of a general ledger is to
provide in a single location the list of transactions affecting each account and the account's balance.
Ursula Company's bookkeeper records revenue relating to a customer transaction. This indicates that the company
provided goods or services to a customer.
Indigo Company's journal reveals that equipment was debited and notes payable was credited, both for $10,000. Indigo Company must have
purchased equipment and signed a note for the purchase price
The purpose of a journal is to
record a chronological listing of every transaction for a company.
Which type of account is increased with a credit?
revenue
The accounting equation is: Assets = Liabilities +
stockholders equity
A simplified version that is used informally for analysis instead of drawing a formal general ledger account is referred to as a:
t-account
When should revenue be recorded?
when services are performed