Accounting practice problems and notes

Assets have a normal ___ balance

Debit

The journal entry to record the payment of $30,000 cash for the creation of the company's logo includes ______.

a debit to Logo/Trademarks and a credit to Cash

X Company purchased land for $30,000 cash. The journal entry to record this transaction would include a ______.

credit to Cash of $30,000 debit to Land of $30,000

A company received $5,000 cash when it issued stock certificates to shareholders. The increase in cash would be recorded with a ______ to the Cash account.

debit

Liabilities have a normal ___ balance

credit

The beginning balance in Lucre's Notes Payable account was $50,000. During the month, Lucre borrowed $60,000 cash from Last National Bank and then paid First National Bank the $40,000 it had borrowed 5 months prior. The balance in Lucre's Notes Payable account is now a ______.

credit of $70,000

If a company issues $100,000 common stock, the Common Stock T-account will have $100,000 posted on the ________ side.

credit or right

An increase in Retained Earnings would be recorded with a ______.

credit

Which of the following are possible effects on the accounting equation when recording a transaction that increases an asset by $100? (Select all that apply.)

A decrease in another asset by $100 A stockholders' equity account increases by $100 A liability account increases by $100

Which of the following are found on a balance sheet? (Select all that apply.)

Assets Stockholders' Equity Liabilities

Company X issued $10,000 of common stock to its owners for cash. It recorded the transaction by increasing assets and increasing liabilities. Which of the following statements are correct?

Liabilities will be too high. Stockholders' equity will be too low.

Identify the account title that may be used to record borrowing cash in exchange for a promissory note.

Notes payable

Accounting Cycle

The series of accounting activities included in recording financial information for a fiscal period

MMM Pizza bought $1,500 of equipment on account (i.e., on credit). What is the effect of recording this transaction on the company's total liabilities?

Total liabilities will increase.

What does a business typically receive when it issues stock to owners?

cash

Which of the following have normal debit balances?

cash, supplies, equipment

A company paid $2,000 cash to an employee for this month's salary. The entry to record this transaction would include a ______ to Cash.

credit

The beginning balance in Lucre's Cash account was $1,200. During the month, Lucre borrowed $5,000 cash from Last National Bank and paid a supplier $500. The balance in Lucre's Cash account is now a ______.

debit of $5,700

Acme Enterprises borrowed $20,000 from Last Bank on a 5-year note payable. Acme's journal entry to record this transaction will include a ______ of $20,000. (Select all that apply.) Multiple select question. debit to Cash

debit to Cash credit to Notes Payable

Noodlecake pays $300 cash to create the company's logo. The journal entry to record this transaction would include a ______ for $300. (Check all that apply.)

debit to Logo/Trademarks credit to Cash

Company X receives $10,000 from issuing common stock to its owners. The effect on the accounting equation is a(n) _____.

increase in assets increase in stockholders' equity

The creditors' claim to a company's resources is represented by ______.

liabilities

Which of the following have normal credit balances?

liabilities and stockholder's equity

A classified balance sheet ______.

shows subtotals for current assets and current liabilities

Z Best, Inc. issued $1,000,000 of common stock for cash. By accident, Z Best recorded the transaction by increasing cash and decreasing stockholders' equity. As a result of this entry, ______.

the accounting equation is out of balance common stock is understated stockholders' equity is understated

Lox, Stock and Bagel, Inc., issued $100,000 of common stock. It recorded the transaction by increasing Cash and decreasing Common Stock. As a result of this entry, ______.

the accounting equation will be out of balance

Current Ratio Formula

total current assets/total current liabilities

A company purchased a $100,000 building in exchange for a 20-year note payable. The company recorded a $100,000 increase in the Building account and a $100,000 decrease in Cash. As a result of this error, ______.(Check all that apply.)

total liabilities are too low total assets are too low