Accounting 1 Exam 1

Which of the following events will not pose an immediate impact on the accounting equation of a retail company? 1)Sale of merchandise 2)A change in marketing strategy 3)Payment of employee salaries 4)Purchase of supplies

2)A change in marketing strategy

A transaction involving a debit to an asset account should be posted on the right side of the T-account. True or False?

False

All business events have an immediate and quantifiable effect on the accounting equation. True or False?

False

In a journal entry, the account to be credited is listed on the first line. True or False?

False

In preparing journal entries, it is acceptable for the amount of total debits to be higher than the amount of total credits. True or False?

False

An account is defined as a record of the business activities related to a particular item. True or False?

True

An increase in revenues increases net income, and net income increases stockholders' equity. True or False?

True

In a journal entry, there are two amount columns: the left-hand column is for debits, and the right-hand column is for credits. True or False?

True

In posting transactions to a T-account, debits are posted on the left side and credits are posted on the right side. True or False?

True

Which of the following is not an asset account? 1)Accounts Payable 2)Cash 3)Equipment 4)Supplies

1)Accounts Payable

Beta Company paid utilities expense of $2,000 for the current month. Which of the following statements correctly shows the effect of this transaction on the accounting equation? 1)Assets will decrease by $2,000, liabilities will remain unchanged, and stockholders' equity will decrease by $2,000 2)Assets will increase by $2,000, liabilities will increase by $2,000, and stockholders' equity will remain unchanged 3)Assets, liabilities, and stockholders' equity will remain unchanged 4)Assets will decrease by $2,000, liabilities will increase by $2,000, and stockholders' equity will remain unchanged

1)Assets will decrease by $2,000, liabilities will remain unchanged, and stockholders' equity will decrease by $2,000

Palmer Corporation borrows $40,000 cash by signing a note with the bank. Which of the following statements correctly shows the effect of this transaction on the accounting equation? 1)Assets will increase by $40,000, liabilities will increase by $40,000, and stockholders' equity will remain unchanged 2)Assets will increase by $40,000, liabilities will decrease by $40,000, and stockholders' equity will remain unchanged 3)Assets will increase by $40,000, liabilities will remain unchanged, and stockholders' equity will increase by $40,000 4)Assets will increase by $40,000, liabilities will remain unchanged, and stockholders' equity will decrease by $40,000

1)Assets will increase by $40,000, liabilities will increase by $40,000, and stockholders' equity will remain unchanged

Microlith received $20,000 cash in advance from customers. Which of the following statements correctly shows the effect of this transaction on the accounting equation? 1)Assets will increase by $20,000, liabilities will remain unchanged, and stockholders' equity will increase by $20,000 2)Assets will increase by $20,000, liabilities will increase by $20,000, and stockholders' equity will remain unchanged 3)Assets will decrease by $20,000, liabilities will remain unchanged, and stockholders' equity will increase by $20,000 4)Assets will remain unchanged, liabilities will increase by $20,000, and stockholders' equity will increase by $20,000

2)Assets will increase by $20,000, liabilities will increase by $20,000, and stockholders' equity will remain unchanged

A company borrows cash from a local bank. The company records this transaction with a: 1)Debit to Accounts Receivable 2)Debit to Cash 3)Credit to Accounts Payable 4)Credit to Retained Earnings

2)Debit to Cash

A company purchases supplies for cash. The company records this transaction with a: 1)Debit to Cash 2)Debit to Supplies 3)Credit to Accounts Receivable 4)Credit to Retained Earnings

2)Debit to Supplies

Amber Corporation provided services to customers on account for $26,000. Which of the following statements correctly shows the effect of this transaction on the accounting equation? 1)Assets will decrease by $26,000, liabilities will remain unchanged, and stockholders' equity will increase by $26,000 2)Assets will increase by $26,000, liabilities will increase by $26,000, and stockholders' equity will remain unchanged 3)Assets will increase by $26,000, liabilities will remain unchanged, and stockholders' equity will increase by $26,000 4)Liabilities will decrease by $26,000, stockholders' equity will remain unchanged, and assets will increase by $26,000

3)Assets will increase by $26,000, liabilities will remain unchanged, and stockholders' equity will increase by $26,000

A company pays cash for utilities. The company records this transaction with a: 1)Credit to Accounts Payable 2)Credit to Accounts Receivable 3)Credit to Cash 4)Credit to Retained Earnings

3)Credit to Cash

Callahan Corporation provides services to customers on account, $900. How would this transaction be recorded? 1)Debit Accounts Payable $900, credit Service Revenue $900 2)Debit Service Revenue $900, credit Accounts Payable $900 3)Debit Accounts Receivable $900, credit Service Revenue $900 4)Debit Service Revenue $900, credit Accounts Receivable $900

3)Debit Accounts Receivable $900, credit Service Revenue $900

Kelly Corporation borrows $120,000 from First Community Bank. How would this transaction be recorded? 1)Debit Accounts Receivable $120,000, credit Notes Payable $120,000 2)Debit Notes Payable $120,000, credit Accounts Receivable $120,000 3)Debit Cash $120,000, credit Notes Payable $120,000 4)Debit Notes Payable $120,000, credit Cash $120,000

3)Debit Cash $120,000, credit Notes Payable $120,000

Timmons Corporation purchases office supplies for $350 cash. How would this transaction be recorded? 1)Debit Inventory $350, credit Cash $350 2)Debit Cash $350, credit Inventory $350 3)Debit Supplies $350, credit Cash $350 4)Debit Cash $350, credit Supplies $350

3)Debit Supplies $350, credit Cash $350

Sampson Corporation pays dividends of $9,000 to shareholders. Which of the following statements correctly shows the effect of this transaction on the accounting equation? 1)Assets will decrease by $9,000, liabilities will remain unchanged, and stockholders' equity will increase by $9,000 2)Assets will increase by $9,000, liabilities will remain unchanged, and stockholders' equity will increase by $9,000 3)Assets will remain unchanged, liabilities will increase by $9,000, and stockholders' equity will decrease by $9,000 4)Assets will decrease by $9,000, liabilities will remain unchanged, and stockholders' equity will decrease by $9,000

4)Assets will decrease by $9,000, liabilities will remain unchanged, and stockholders' equity will decrease by $9,000

Bell Company purchased supplies for $700 cash. Which of the following statements correctly shows the effect of this transaction on the accounting equation? 1)Assets will increase by $700, liabilities will remain unchanged, and stockholders' equity will increase by $700 2)Assets will increase by $700, liabilities will increase by $700, and stockholders' equity will remain unchanged 3)Assets will remain unchanged, liabilities will increase by $700, and stockholders' equity will remain unchanged 4)Assets will remain unchanged, liabilities will remain unchanged, and stockholders' equity will remain unchanged

4)Assets will remain unchanged, liabilities will remain unchanged, and stockholders' equity will remain unchanged

A company bills customers for services provided. The company records this transaction with a: 1)Debit to Cash 2)Debit to Retained Earnings 3)Credit to Accounts Payable 4)Credit to Service Revenue

4)Credit to Service Revenue

Livingston Company pays utilities of $2,500 in cash. How would this transaction be recorded? 1)Debit Accounts Payable $2,500, credit Cash $2,500 2)Debit Cash $2,500, credit Retained Earnings $2,500 3)Debit Cash $2,500, credit Utilities Expense $2,500 4)Debit Utilities Expense $2,500, credit Cash $2,500

4)Debit Utilities Expense $2,500, credit Cash $2,500