Accounting 100 Adaptive Practice Chapter 3

Which of the following statements is true? A A debit to an asset account always indicates an increase in the asset. B A debit to an asset account always indicates a credit was made to a liability account. C A debit to an asset account always indicates a decrease in the asset. D A debit to an asset account always indicates an error.

A A debit to an asset account always indicates an increase in the asset.

What happens when a company issues common stock for $40,000 and uses $30,000 of the cash to purchase a truck? A Assets are increased by $40,000. B Stockholders' equity is reduced by $40,000. C Assets are increased by $10,000. D Assets remain unchanged.

A Assets are increased by $40,000.

What happens when services are performed for cash? A Assets increase. B Liabilities increase. C Stockholders' equity decreases. D Liabilities decrease.

A Assets increase.

Two companies complete their trial balance for the month of June. Xenon Tech had a credit balance that was greater than their debit balance while Titan Industries had a credit balance that is lower than their debit balance. How do the two compare? A Both companies have made errors in the trial balance. B Xenon Tech has borrowed money while Titan Industries has loaned money. C Xenon Tech spent more than they made while Titan Industries made more than they spent in June. D Xenon Tech made more than they spent while Titan Industries spent more than they made in June.

A Both companies have made errors in the trial balance.

Cash and Equipment are asset accounts. If equipment is purchased using cash, then A Cash is credited and Equipment is debited. B Cash is debited and Equipment is credited. C both Cash and Equipment are credited. D both Cash and Equipment are debited, since they are both assets.

A Cash is credited and Equipment is debited.

You are working on an account that has more total credits than total debits. Which of the following accounts could you be working on? A Common Stock. B Equipment. C Cash. D Rent Expense.

A Common Stock.

On March 3, Mauer Moving buys $7,500 of supplies from General Products. Mauer does not provide any payment at the time of purchase but agrees to reimburse General in full within 30 days. When posting the journal entries related to this transaction, Mauer credits Supplies for $7,500 and debits Accounts Payable for $7,500. Which of the following statements best describes the results of this posting? A In Mauer's general ledger, the ending balances for both the Supplies account and the Accounts Payable account will be too low. B In Mauer's general ledger, the ending balance for the Supplies account will be too low, while the ending balance for the Accounts Payable account will be too high. C In Mauer's general ledger, the ending balance for the Supplies account will be too high, while the ending balance for the Accounts Payable account will be too low. D In Mauer's general ledger, the ending balances for both the Supplies account and the Accounts Payable account will be too high.

A In Mauer's general ledger, the ending balances for both the Supplies account and the Accounts Payable account will be too low.

What is NOT a purpose or benefit of a journal? A It ensures that financial statements are always correct. B It provides the description of a transaction and how it affects different accounts. C It records transactions in a chronological order. D It prevents errors or makes their tracking easier.

A It ensures that financial statements are always correct.

What is the purpose of the 'explanation' of each transaction that appears in a journal entry? A It provides insight into the purpose of the activity recorded. B It separates individual journal entries. C It ensures that the correct account names are used in each entry. D It verifies that the total debit amount is equal to the total credit amount of each entry.

A It provides insight into the purpose of the activity recorded.

Suppose that a firm issues a $5,000 note payable in exchange for $5,000 of equipment. What effect would this have on the Notes Payable account? A It would increase the account as a credit. B It would decrease the account as a credit. C It would decrease the account as a debit. D It would increase the account as a debit.

A It would increase the account as a credit.

Stockholders' equity and liabilities both have normal credit balances. Why are the stockholders' equity debit/credit rules more complex than liabilities? A The elements of Stockholders' Equity are broken into different types of accounts; some are increased with debits and some with credits. B Stockholders' equity is composed of both Common Stock and Retained Earnings, one of which is increased with debits and the other with credits. C Dividends are paid to common stockholders, thus reducing Common Stock. D Net income can be a loss, thus changing the debit/credit relationship.

A The elements of Stockholders' Equity are broken into different types of accounts; some are increased with debits and some with credits.

Why is it important to examine the effects of a business transaction prior to preparing a journal entry? A The examination provides information concerning the nature of the transaction's effects on specific accounts. B The examination provides a basis for completing the necessary business documents. C The examination provides the account names to be used when the transaction is recorded in the ledger. D The examination provides the name of the financial statements on which the transaction amounts will appear.

A The examination provides information concerning the nature of the transaction's effects on specific accounts.

Which statement is true concerning any account? A The right side is the credit and the left side is the debit. B The debit side indicates an increase and the credit side indicates a decrease. C The identification of the debit or credit side as left or right depends upon the type of account. D The left side is the credit and the right side is the debit.

A The right side is the credit and the left side is the debit.

What could happen when an individual asset is increased? A There could be an equal decrease in another asset. B There could be an equal decrease in stockholders' equity. C None of the choices is correct. D There could be an equal decrease in a specific liability.

A There could be an equal decrease in another asset.

During the month of May, Apex Industries recorded a $3,000 debit to an expense account. Which of the following explanations of this transaction is the MOST accurate? A This entry indicates that Apex incurred $3,000 in expenses. It also suggests that the firm may have recorded a $3,000 credit to an asset account in order to offset the corresponding decrease in stockholders' equity. B This entry indicates that Apex incurred $3,000 in expenses. It also suggests that the firm may have recorded a $3,000 debit to an asset account in order to offset the corresponding increase in stockholders' equity. C This entry indicates that Apex incurred $3,000 in expenses. It also suggests that the firm may have recorded a $3,000 credit to an asset account in order to offset the corresponding increase in stockholders' equity. D This entry indicates that Apex incurred $3,000 in expenses. It also suggests that the firm may have recorded a $3,000 debit to an asset account in order to offset the corresponding decrease in stockholders' equity.

A This entry indicates that Apex incurred $3,000 in expenses. It also suggests that the firm may have recorded a $3,000 credit to an asset account in order to offset the corresponding decrease in stockholders' equity.

During October, Blue Sky Inc. correctly enters a $10,000 credit to its Revenues account. What conclusions can be made based on this accounting entry? A This entry indicates that Blue Sky recognized $10,000 in revenue in October, which likely means that the firm's net income, ending retained earnings, and stockholders' equity all increased. B This entry indicates that Blue Sky lost $10,000 in revenue in October, which likely means that the firm's net income and ending retained earnings decreased while its stockholders' equity increased. C This entry indicates that Blue Sky lost $10,000 in revenue in October, which likely means that the firm's net income, ending retained earnings, and stockholders' equity all decreased. D This entry indicates that Blue Sky recognized $10,000 in revenue in October, which likely means that the firm's net income and ending retained earnings increased while its stockholders' equity decreased.

A This entry indicates that Blue Sky recognized $10,000 in revenue in October, which likely means that the firm's net income, ending retained earnings, and stockholders' equity all increased.

Service revenue increases stockholders' equity and should be recorded when the service has been performed. A True B False

A True

When calculating the balance of the Sales Revenue account, you find that the balance is lower than expected. However, according to your Balance Sheet and your analysis of the accounting equation, all of your debits and credits are equal across accounts. What is the most likely explanation for this? A You failed to record a sales transaction in the journal, so it never got transferred to the ledger or financial documents. B You made a digit transpose error while recording an entry in the Sales Revenue account. C You recorded an entry in the Sales Revenue account as a debit rather than a credit. D You failed to record an entry in the Sales Revenue account even though it was posted to the Cash account.

A You failed to record a sales transaction in the journal, so it never got transferred to the ledger or financial documents.

With which type of account does the chart of accounts typically begin? A asset accounts B revenue accounts C expense accounts D liability accounts

A asset accounts

Becky's Catering received a cash advance of $1,500 for a party to be held in the future. This cash advance means that the caterer's ________ by $1,500. A assets increased B stockholders' equity increased C liabilities decreased D assets and stockholders' equity both increased

A assets increased

Gathering relevant source documents must be done when in relation to the recording process? A before getting started B as the first step C as the final step D after completion

A before getting started

A company recorded a transaction that caused a debit to Cash and a credit to Common Stock. Therefore, A both Cash and Common Stock increased. B both Cash and Common Stock decreased. C Cash increased and Common Stock decreased. D Cash decreased and Common Stock increased.

A both Cash and Common Stock increased.

Which of the following accounts normally have a debit balance? Select all that apply. A dividends account B expenses C asset accounts D retained earnings account

A dividends account B expenses C asset accounts

A credit is the normal balance for which of the following accounts? Select all that apply. A revenue account B common stock account C dividends account D liability account

A revenue account B common stock account dividends account D liability account

What is the classification and normal balance of the Dividends account? A stockholders' equity with a debit balance B revenue with a credit balance C an expense with a debit balance D a liability with a credit balance

A stockholders' equity with a debit balance

How will the See Clear Company record the following transaction on June 8th? Paid $1,700 for equipment that had been purchased on May 14th. Identify the correct account name that should be entered in the second row of the journal entry form in order to correctly record this transaction. A Accounts Receivable B Cash C Equipment D Accounts Payable

B Cash

What happens when a business collects an accounts receivable? A Cash decreases and accounts receivable increases. B Cash increases and accounts receivable decreases. C Both cash and accounts receivable decrease. D Both cash and accounts receivable increase.

B Cash increases and accounts receivable decreases.

Which of the following problems may cause financial statements to be inaccurate? A Failing to follow a specific budget. B Failing to use specific account titles. C Paying more dividends than net income received. D Overspending the Cash account.

B Failing to use specific account titles.

If a company pays dividends of $5,000, the dividends account decreases by $5,000. A True B False

B False

On September 1, Pike Products purchases $5,000 of supplies from Indigo Industries, with the understanding that Pike will provide payment within 60 days. When posting the journal entries related to this transaction, Pike's accounting staff debits Supplies for $5,000 and debits Cash for $5,000. Which of the following statements best describes the results of this posting? A In Pike's general ledger, the ending balance for the Cash account will be correct. However, the ending balance for the Supplies account will be too high, while the ending balance for the Accounts Payable account will be too low. B In Pike's general ledger, the ending balance for the Supplies account will be correct. However, the ending balance for the Cash account will be too high, while the ending balance for the Accounts Payable account will be too low. C In Pike's general ledger, the ending balance for the Cash account will be correct. However, the ending balance for the Supplies account will be too low, while the ending balance for the Accounts Payable account will be too high. D In Pike's general ledger, the ending balance for the Supplies account will be correct. However, the ending balance for the Cash account will be too low, while the ending balance for the Accounts Payable account will be too high.

B In Pike's general ledger, the ending balance for the Supplies account will be correct. However, the ending balance for the Cash account will be too high, while the ending balance for the Accounts Payable account will be too low.

Suppose a firm has used $15,000 of its cash to pay rent this month. What effect would this have on the Cash and Rent Expense accounts? A It would increase the Cash account as a debit and increase the Rent Expense account as a credit. B It would decrease the Cash account as a credit and increase the Rent Expense account as a debit. C It would decrease the Cash account as a debit and decrease the Rent Expense account as a credit. D It would increase t

B It would decrease the Cash account as a credit and increase the Rent Expense account as a debit.

Which of the following events would lead to a decrease in a firm's retained earnings, and why? A Payment of $10,000 in employee salaries, because salaries are considered a liability, and an increase in liabilities will reduce a firm's retained earnings B Payment of $10,000 in employee salaries, because salaries are considered an expense, and an increase in expenses will reduce a firm's retained earnings C Issuance of a $10,000 note payable in exchange for cash, because notes payable are considered a liability, and an increase in liabilities will reduce a firm's retained earnings D Issuance of a $10,000 note payable in exchange for cash, because notes payable are considered an expense, and an increase in expenses will reduce a firm's retained earnings

B Payment of $10,000 in employee salaries, because salaries are considered an expense, and an increase in expenses will reduce a firm's retained earnings

You are entering transactions to the Common Stock account. Which of the following would you expect to occur? A The account will have equal debits and credits. B The account will have more total credits than total debits. C The account will have only debits and no credits. D The account will have more total debits than total credits.

B The account will have more total credits than total debits.

The Stockholders' Equity portion of the accounting equation is divided into multiple types of accounts. How does this affect the debit/credit rules for Stockholders' Equity accounts? A The debit/credit rules are more complex than for assets and liabilities because each transaction requires debits and credits to more than the standard two accounts. B The debit/credit rules are more complex than for assets and liabilities because some Stockholders' Equity accounts use debits to increase the balance and some use credits to increase the balance. C The debit/credit rules are less complex than for assets and liabilities because they are only used at the end of the accounting period rather than throughout the accounting period. D The debit/credit rules are less complex than for assets and liabilities because each type of account uses only debits or only credits.

B The debit/credit rules are more complex than for assets and liabilities because some Stockholders' Equity accounts use debits to increase the balance and some use credits to increase the balance.

During the month of June, Arlen Inc. incurred $2,500 in expenses. What effect will these expenses have on the firm's accounts for the month if the expenses were paid with cash? A These expenses will necessitate that Arlen record a $2,500 credit to an expense account and an offsetting $2,500 credit to an asset account. B These expenses will necessitate that Arlen record a $2,500 debit to an expense account and an offsetting $2,500 credit to an asset account. C These expenses will necessitate that Arlen record a $2,500 debit to an expense account and an offsetting $2,500 debit to an asset account. D These expenses will necessitate that Arlen record a $2,500 credit to an expense account and an offsetting $2,500 debit to an asset account.

B These expenses will necessitate that Arlen record a $2,500 debit to an expense account and an offsetting $2,500 credit to an asset account.

How are dividends treated in a double-entry system? A They are credited to increase them, because they are a part of stockholders' equity. B They are debited to increase them, despite being a part of stockholders' equity. C They are debited to increase them, because they are assets. D They are credited to increase them, because they are liabilities.

B They are debited to increase them, despite being a part of stockholders' equity.

Becker Enterprises received a cash advance of $500 from a customer. As a result, ________ by $500. A liabilities decreased B assets increased C both assets and stockholders, equity increased D stockholders' equity increased

B assets increased

Which of the following is included in the journal entry for equipment purchased for $20,000 by paying $5,000 cash and signing a note for the remainder? A debit to Notes Payable B credit to Cash C credit to Notes Receivable D credit to Equipment

B credit to Cash

The normal balances in stockholders' equity accounts are A all credits except for expenses that are debits. B credits for Common Stock, Retained Earnings and revenues, but debits for the others. C all credits, like liabilities. D credits for Common Stock and Retained Earnings, but debits for all others.

B credits for Common Stock, Retained Earnings and revenues, but debits for the others.

Stockholders' equity accounts A include revenues, Dividends, Common Stock, and Retained Earnings with normal credit balances and expenses with a normal debit balance. B include revenues, Common Stock, and Retained Earnings with normal credit balances, but expenses and Dividends have normal debit balances. C all have normal credit balances similar to liabilities. D include Common Stock and Retained Earnings with normal credit balances, but revenues, expenses, and Dividends have debit balances.

B include revenues, Common Stock, and Retained Earnings with normal credit balances, but expenses and Dividends have normal debit balances.

The Dividends account A is a stockholders' equity account, so it is credited to increase it. B is a stockholders' equity account, but it is debited to increase it. C is a liability, so it is credited to increase it. D is an asset, so it is debited to increase it.

B is a stockholders' equity account, but it is debited to increase it.

During the past month, Pinnacle Corporation purchased a new delivery truck, sold an empty warehouse to another company, met with an existing client to discuss possible extension of a sales contract, and paid its mortgage and utility bills. Of these events, which would not be recorded in Pinnacle's accounting records? A purchasing the delivery truck B meeting with the existing client C paying the mortgage and utility bills D selling the empty warehouse

B meeting with the existing client

Expenses are debited to increase their balance because A they decrease liabilities. B they decrease Retained Earnings. C they are assets. D they decrease Common Stock.

B they decrease Retained Earnings.

In the ledger, how do asset and liability accounts compare? A Both types of accounts have a credit balance. B Both types of accounts have a debit balance. C An asset account has a debit balance while a liability account has a credit balance. D An asset account has a credit balance while a liability account has a debit balance.

C An asset account has a debit balance while a liability account has a credit balance.

A transaction occurred that increased Cash and Common Stock. As a result, A Cash would be credited and Common Stock would be debited. B Cash would be debited and Common Stock would be debited. C Cash would be debited and Common Stock would be credited. D Cash would be credited and Common Stock would be credited.

C Cash would be debited and Common Stock would be credited.

Suppose that, as a firm, you have sought to raise capital and were able to do this by issuing $750,000 of common stock and taking on a $500,000 debt. What would your postings be? A Debit Cash $1,250,000, Credit Common Stock $500,000 and Credit Notes Payable $750,000. B Debit Cash $750,000, Credit Common Stock $500,000 and Credit Notes Payable $1,250,000. C Debit Cash $1,250,000, Credit Common Stock $750,000 and Credit Notes Payable $500,000. D Debit Cash $750,000, Credit Common Stock $1,250,000 and Credit Notes Payable $500,000.

C Debit Cash $1,250,000, Credit Common Stock $750,000 and Credit Notes Payable $500,000.

On April 24th, Mission Enterprises declared and paid a cash dividend in the amount of $18,000. What accounts are debited and credited? A Debit Dividends, credit Retained Earnings B Debit Retained Earnings, credit Dividends C Debit Dividends, credit Cash D Debit Retained Earnings, credit Cash

C Debit Dividends, credit Cash

On May 10, Cardoza Construction purchased equipment of $500 on account. The entry to record the purchase will include a debit to ________ and a credit to A Accounts Receivable; Equipment. B Equipment; Accounts Receivable. C Equipment; Accounts Payable. D Equipment; Cash.

C Equipment; Accounts Payable.

On February 2, Miles Inc. pays $800 to purchase a one-year insurance policy that will expire next year on January 31. Miles indicates this transaction in its books by recording an $800 reduction in cash and an $800 increase in expenses. Did Miles make the proper accounting entries? Why or why not? A No, Miles did not make the proper accounting entries. Prepaid insurance is a liability, not an expense. Thus, the firm should have offset the $800 decrease in cash (an asset account) with an $800 decrease in prepaid insurance (a liability account). B Yes, Miles made the proper accounting entries. In order to keep the accounting equation in balance, the firm had to increase its expenses and thus decrease its stockholders' equity by the same amount as it decreased its assets. C No, Miles did not make the proper accounting entries. Prepaid insurance is an asset, not an expense. Thus, the firm should have offset the $800 decrease in cash (an asset account) with an $800 increase in prepaid insurance (also an asset account). D No, Miles did not make the proper accounting entries. Prepaid insurance is a liability, not an expense. Thus, the firm should have offset the $800 decrease in cash (an asset account) with an $800 increase in prepaid insurance (a liability account).

C No, Miles did not make the proper accounting entries. Prepaid insurance is an asset, not an expense. Thus, the firm should have offset the $800 decrease in cash (an asset account) with an $800 increase in prepaid insurance (also an asset account).

What happens when services are performed on account? A Liabilities decrease. B Liabilities increase. C Stockholders' equity Increases. D Assets decrease.

C Stockholders' equity Increases.

Select all answers that are true concerning any account. Select all that apply. A The credit side indicates a decrease. B The debit side indicates an increase. C The left side is the debit side. D The identification of which side is debit or credit depends upon the type of account. E The right side is the credit side. F The credit side is left or right depending on the type of account.

C The left side is the debit side. E The right side is the credit side.

Pickett, Inc. recorded its monthly transactions in the journal, but failed to record a transaction involving cash received from customers on January 14. Assuming Pickett performed all subsequent steps in the recording process correctly for the month, what will likely occur? A The transaction will be transferred to the financial statements, but not be incorporated to appropriate accounts in the ledger. B The transaction will be transferred to the ledger, but not to the financial statements. C The transaction will not be transferred to the ledger, nor incorporated in the financial statements D The transaction will be correctly analyzed, but will not be supported by the appropriate business documents.

C The transaction will not be transferred to the ledger, nor incorporated in the financial statements

Accounts Payable had a balance of $4,200 prior to cash of $1,000 being paid to suppliers for previous invoices. The entry in the ledger for Accounts Payable would include A a balance of $5,200. B a credit of $1,000. C a debit of $1,000. D a balance of $4,200.

C a debit of $1,000.

ntering transaction information directly into the accounts A is the preferred method of recording transactions. B is not allowed under generally accepted accounting principles. C is possible, though few businesses do so. D occurs after financial statements are prepared.

C is possible, though few businesses do so.

Which of the following accounting entries would you MOST expect to accompany a $9,000 decrease in cash, and why? A A $9,000 increase in Common Stock, because common stock is part of stockholders' equity and any decrease in a firm's assets should be offset by an equal increase in the firm's liabilities plus stockholders' equity. B A $9,000 increase in Service Revenue, because service revenue is a liability and any decrease in a firm's assets should be offset by an equal increase in the firm's liabilities plus stockholders' equity. C A $9,000 increase in Unearned Service Revenue, because unearned service revenue is a liability and any decrease in a firm's assets should be offset by an equal increase in the firm's liabilities plus stockholders' equity. D A $9,000 increase in Equipment, because cash is an asset, so an equal but opposite change to another asset account such as Equipment will offset the increase to the Cash account.

D A $9,000 increase in Equipment, because cash is an asset, so an equal but opposite change to another asset account such as Equipment will offset the increase to the Cash account.

Which of the following is the correct format for an account title? Why? A accounts payable; bolding indicates that it should appear as a heading in the accounting records B accounts payable; underlining indicates that it should appear as a heading in the accounting records C accounts payable; italics indicate that it is a specific account name D Accounts Payable; capitalization indicates that it is a specific account name

D Accounts Payable; capitalization indicates that it is a specific account name

Suppose that a consulting firm provides management consulting services, and bills large firms $100,000 prior to a consulting engagement for services that will be performed. Which of the entries below would most accurately reflect the posting required? A Credit Cash $100,000 and Credit Unearned Service Revenue $100,000 B Credit Cash $100,000 and Debit Unearned Service Revenue $100,000 C Debit Cash $100,000 and Debit Unearned Service Revenue $100,000 D Debit Cash $100,000 and Credit Unearned Service Revenue $100,000

D Debit Cash $100,000 and Credit Unearned Service Revenue $100,000

Determining the effect of a transaction on the accounts is a desired outcome of which step of the recording process? A Examination of ledger entries. B Examination of journal entries. C Examination of financial statements. D Examination of source documents.

D Examination of source documents.

This is a list of activities that occur in the accounting process: I. Enter the transaction information in the journal. II. Transfer amounts from the journal to the appropriate accounts in the ledger. III. Analyze each transaction's effects on the accounts. IV. Prepare financial statements. Select the answer choice containing the steps of the recording process in the correct order. A IV, III, I, II B I, II, III, IV C I, II, IV, III D III, I, II, IV

D III, I, II, IV

ntries related to this transaction, Mega's accounting staff credits Cash for $50,000 and credits Accounts Payable for $50,000. Which of the following statements best describes the results of this posting? A In Mega's general ledger, the ending balance for the Cash account will be too low, while the ending balance for the Accounts Payable account will be too high. B In Mega's general ledger, the ending balance for the Cash account will be correct. However, the ending balance for the Accounts Payable account will be too low and the ending balance for the Salaries Expense account will be too high. C In Mega's general ledger, the ending balance for the Cash account will be too high, while the ending balance for the Accounts Payable account will be too low. D In Mega's general ledger, the ending balance for the Cash account will be correct. However, the ending balance for the Accounts Payable account will be too high and the ending balance for the Salaries Expense account will be too low.

D In Mega's general ledger, the ending balance for the Cash account will be correct. However, the ending balance for the Accounts Payable account will be too high and the ending balance for the Salaries Expense account will be too low.

Karen Pollard owns an ice cream shop. She is in the middle of her accounting period, and she wants to know the amount of accounts receivable owed to the company. Should she look at the trial balance first? Why or why not? A Yes; the trial balance is kept up-to-date after every transaction. B No; the trial balance only gives an estimate of the amount in each account, not a specific value. C No; the trial balance only shows credit accounts, not debit accounts. D No; the trial balance is only up-to-date at the end of the accounting period.

D No; the trial balance is only up-to-date at the end of the accounting period.

Which of the following items are considered to be accounts? A debits and credits B customers and creditors C revenues and expenses D Service Revenue and Cash

D Service Revenue and Cash

________ will increase when services are performed on account. A Equipment B Liabilities C Cash D Stockholders' equity

D Stockholders' equity

Joe Smith examined the sales slip related to a customer sale. Which part of the recording process is this action? A Entering the transaction in the journal. B The transfer of the transaction to the appropriate accounts in the ledger. C The preparation of the financial statements. D The analysis of each transaction.

D The analysis of each transaction.

Which of the following transactions would require a credit to Cash and a credit to Notes Payable? A The company purchased equipment for $20,000 by paying $10,000 cash and providing $10,000 of services for the remainder. B The company purchased equipment for $20,000 by paying $20,000 cash. C The company purchased equipment for $20,000 by paying $5,000 cash and giving 1,000 shares of stock for the remainder. D The company purchased equipment for $20,000 by paying $5,000 cash and signing a note for the remainder.

D The company purchased equipment for $20,000 by paying $5,000 cash and signing a note for the remainder.

During JCL's month end close, only the debit side of a journal entry was posted. How will this affect JCL's trial balance? A There will be more credit accounts than debit accounts. B Liabilities will be greater than assets. C This will not affect the trial balance. D The total debit column will not equal the total credit column.

D The total debit column will not equal the total credit column.

Excel Corporation's financial statements for last month show a $10,000 decrease in cash, a $7,000 increase in notes payable, and a $17,000 increase in equipment, all of which occurred on the same date. Taken collectively, what do these three entries suggest? A They suggest that Excel purchased a $7,000 piece of equipment but mistakenly recorded a purchase price of $17,000. B They suggest that Excel sold a $10,000 piece of equipment for $17,000 and therefore recorded a $10,000 gain. C They suggest that Excel sold a $17,000 piece of equipment for $10,000 and therefore recorded a $7,000 loss. D They suggest that Excel purchased a $17,000 piece of equipment by paying $10,000 in cash and taking out a $7,000 loan.

D They suggest that Excel purchased a $17,000 piece of equipment by paying $10,000 in cash and taking out a $7,000 loan.

During the month of August, Jackson Products recognizes $15,000 in revenues. Jackson's accounting staff records these revenues by entering a $15,000 debit in the firm's Revenues account and a $15,000 credit in the Accounts Receivable account. What, if any, effect will this entry have on Jackson's financial statements? A This entry will inappropriately decrease Jackson's revenues, thus making the firm's net income too low on its income statement, ending retained earnings too high on its retained earnings statement, and both its assets and its stockholders' equity too high on its balance sheet. B This entry will not have any effect on Jackson's financial statements because a firm's revenues are not reflected in its income statement, its retained earnings statement, or its balance sheet. C This entry will inappropriately increase Jackson's revenues, thus making the firm's net income too high on its income statement, ending retained earnings too high on its retained earnings statement, and both its assets and its assets and its stockholders' equity too high on its balance sheet. D This entry will inappropriately decrease Jackson's revenues, thus making the firm's net income too low on its income statement, ending retained earnings too low on its retained earnings statement, and both its assets and its stockholders' equity too low on its balance sheet.

D This entry will inappropriately decrease Jackson's revenues, thus making the firm's net income too low on its income statement, ending retained earnings too low on its retained earnings statement, and both its assets and its stockholders' equity too low on its balance sheet.

A company borrows $10,000 in the form of a note. The ledger will show a $10,000 A credit in the Cash account. B credit in the Notes Receivable account. C debit in the Notes Payable account. D debit in the Cash account.

D debit in the Cash account.

Assets and liabilities increase when a business A performs services for cash. B purchases equipment for cash. C receives cash investments from stockholders. D receives cash in advance from a customer.

D receives cash in advance from a customer.

Receipts of cash in advance from customers are not treated as revenue at the time of receipt because A the customer may demand some of the money back. B reporting the receipts would complicate the calculation of taxes. C cash in advance goes straight to stockholders' equity. D revenue cannot be recognized until the work is performed.

D revenue cannot be recognized until the work is performed.

Stockholders' equity is not affected when A the company performs services for cash. B the company pays expenses. C stockholders invest money in the company. D the company pays a portion of an account payable.

D the company pays a portion of an account payable.

Which of the following is used to initially record transactions in the recording process? A the balance sheet B the ledger C the income statement D the journal

D the journal

What is the purpose of transaction analysis? A to help financial accountants produce year to date analyses B to determine how a journal entry was posted in the past C to help managerial accountants analyze month over month variances D to identify the type of account involved, and then to determine whether to make a debit or a credit to the account

D to identify the type of account involved, and then to determine whether to make a debit or a credit to the account

What effect may result if specific account titles are not used in journalizing? A The general ledger will not balance. B The contents of the account will differ from the name of the account. C The financial statements may be not be accurate. D The journal entry will not balance.

C The financial statements may be not be accurate.

The classification and normal balance of the Retained Earnings account is A expense, debit. B revenues, credit. C stockholders' equity, credit. D asset, debit.

C stockholders' equity, credit.

Unlike the normal balance in stockholders' equity accounts, expenses have a debit balance. Why? A Expenses decrease Retained Earnings. B Expenses are assets. C Expenses decrease Common Stock. D Expenses increase Retained Earnings.

A Expenses decrease Retained Earnings.

Although possible, few businesses A enter transactions directly into the accounts. B examine source documents. C prepare financial statements. D use the double-entry bookkeeping method.

A enter transactions directly into the accounts.

Total assets will remain unchanged if A equipment is purchased for $1,800 cash. B stockholders invest $1,800. C the company issues $1,800 in dividends. D goods are sold for $1,800 cash.

A equipment is purchased for $1,800 cash.

A company should record its monthly transactions in the _______, transfer each amount to the _______, which then becomes part of the A journal; ledger; financial statements. B ledger; financial statements; journal. C ledger; journal; financial statements. D journal; financial statements; ledger.

A journal; ledger; financial statements.

Liability with a credit balance is the classification and normal balance of A Accounts Payable. B Dividends. C Retained Earnings. D Accumulated Depreciation.

A Accounts Payable.

On February 12th, Philips Industries paid $8,520 to Jamison Consulting for consulting services performed in January. What accounts are debited and credited? A Debit Accounts Payable and credit Cash B Debit Cash and credit Accounts Receivable C Debit Cash and credit Accounts Payable D Debit Accounts Receivable and credit Cash

A Debit Accounts Payable and credit Cash

________ that require recording in the financial statements are called accounting transactions. A Economic events B Tax hikes C Explanations D Regulations

A Economic events

he classification and normal balance of the Accounts Payable account is A Asset, with a debit balance. B Liability, with a credit balance. C Expense, with a debit balance. D Revenues, with a credit balance.

B Liability, with a credit balance.

March 12th Blakely Accountants performed accounting services for your small business and billed you $12,000. In Blakely's records, which account would be debited? A Cash B Service Revenue C Accounts Payable D Accounts Receivable

D Accounts Receivable

Last year, your business did very well and as a result you plan to declare and pay a dividend in the amount of $900,000. What would the posting be for this transaction? A Debit Dividends $900,000 and Debit Cash $900,000 B Credit Dividends $900,000 and Credit Cash $900,000 C Credit Dividends $900,000 and Debit Cash $900,000 D Debit Dividends $900,000 and Credit Cash $900,000

D Debit Dividends $900,000 and Credit Cash $900,000

In the ledger, Accounts Receivable shows a debit balance of $12,500, indicating A that customers owe $12,500 to the company. B receipt of $12,500 from customers. C that $12,500 in services are owed to customers. D sales for the period totaled $12,500.

A that customers owe $12,500 to the company.

What is the primary purpose of the trial balance? A to prove the equality of the debit and credit amounts after posting B to disclose the complete effect of a transaction in one place C to ensure a journal entry is not posted twice D to facilitate the transfer of journal entries to the ledger accounts

A to prove the equality of the debit and credit amounts after posting

European accounting systems A use the same double-entry system used in the United States. B use a different basic accounting system than used in the United States. C do not use an equity section as is used in the United States. D always measure amounts in the same way as in the United States.

A use the same double-entry system used in the United States.

If a company issues common stock for $40,000 and uses $30,000 of the cash to purchase a truck, assets will be increased by A $30,000. B $40,000. C $70,000. D $10,000.

B $40,000.

In which of the following cases will a trial balance have an error and yet still balance? A If a number was transposed when transcribing it from the ledger. B A transaction is not journalized. C A debit amount is recorded in the credit column. D A trial balance only balances when no errors have been made.

B A transaction is not journalized.

What happens when a business receives cash in advance from a customer? A Assets and stockholders' equity increase. B Assets and liabilities increase. C Assets increase but stockholders' equity decreases. D Assets, liabilities, and stockholders' equity remain unchanged.

B Assets and liabilities increase.

A transaction was not posted. This would cause the trial balance to be out of balance. A True B False

B False

What will happen if expenses are paid in cash? A Assets will increase. B Liabilities will decrease. C Assets will decrease. D Stockholders' equity will increase.

C Assets will decrease.

Mallard Company's total debit column is $27,000 on its trial balance. The remainder of the trial balance shows Accounts Payable of $3,000 and Service Revenue of $20,000 and Notes Payable is blank. What is balance for the Notes Payable account if no errors have occurred in the trial balance? A $17,000 B $23,000 C $27,000 D $4,000

D $4,000

A firm would record which of the following accounting entries after purchasing $1,750 of supplies on account? A a $1,750 decrease to Supplies, along with a $1,750 increase to Notes Payable B a $1,750 decrease to Cash, along with a $1,750 decrease to Retained Earnings C a $1,750 increase to Supplies, along with a $1,750 decrease to Cash D a $1,750 increase to Supplies, along with a $1,750 increase to Accounts Payable

D a $1,750 increase to Supplies, along with a $1,750 increase to Accounts Payable

________ ________ are economic events that require recording in financial statements.

accounting transactions

Because dividends reduce stockholders' equity, the normal balance of the Dividends account is a (credit/debit) balance.

debit

There could be an equal (increase/ decrease) in another asset when an individual asset is increased, and the accounting equation will still balance.

decrease

There is an increase in (no effect on/ an increase in) retained earnings when land is purchased.

no effect on

During posting, information is transferred from the (source documents/journal) to the ledger.

journal