chapter 2 pt2

If a company records $1,000 of debits, it must have recorded: Multiple choice question. $1,000 of credits a $1,000 profit a credit to Common Stock a $1,000 loss

$1,000 of credits

A company's beginning Notes Payable is $100,000. It borrowed $50,000 by issuing a promissory note to the bank and repaid $60,000 of the amounts owed. The Notes Payable ending balance equals a _____ balance. Multiple choice question. $110,000 debit $90,000 debit $110,000 credit $210,000 debit $90,000 credit $210,000 credit

$90,000 credit

Show the effect of recording the borrowing of $10,000 from a bank on the accounting equation. _____ by $10,000. (Select all that apply.) Assets decrease Stockholders' equity increases Stockholders' equity decreases Assets increase Liabilities increase Liabilities decrease

Assets increase Liabilities increase

Which transactions are recorded in the accounting system?

Both external exchanges and internal events

The issuance of common stock is recorded with a debit to ______ and a credit to ______

Cash; Common Stock Common Stock; Cash Reason: Cash is increased with a debit (+A) and Common Stock is increased with a credit (+SE). Cash; Notes Payable Reason: A debit to Cash (+A) and a credit to Notes Payable (+L) is recorded for the issuance of a promissory note to a creditor, not the issuance of stock to owners. The correct entry is debit Cash (+A) and credit Common Stock (+SE). Notes Payable; Cash Reason: A debit to Notes Payable (-L) and a credit to Cash (-A) is recorded when a promissory note is repaid. The correct entry is debit Cash (+A) and credit Common Stock (+SE).

ct all that apply Identify which of the following statements are true. (Select all that apply.) Multiple select question. Credits increase assets. Credits increase liabilities. Assets are on the left side of the accounting equation and have a normal debit balance. Credits increase stockholders' equity. Liabilities are on the right side of the accounting equation and have normal credit balances.

Credits increase liabilities. Assets are on the left side of the accounting equation and have a normal debit balance. Credits increase stockholders' equity. Liabilities are on the right side of the accounting equation and have normal credit balances.

Which of the following are on the credit side of the Accounts Payable T-account? (Select all that apply.) Multiple select question. Payments of purchases made on account Ending balance Purchases on account Beginning balance

Ending balance Purchases on account Beginning balance

When a company issues common stock, it gives cash to its owners in exchange for stock.

False Reason: When a company issues common stock, it receives cash and gives stock certificates to its owners.

Which of the following have normal credit balances? cash notes payable equipment accounts payable common stock supplies

Notes Payable Accounts Payable Common Stock

Which of the following are possible effects on the accounting equation when recording a transaction that affects two accounts? One asset account decreases and one stockholders' equity account increases One asset account increases and one stockholders' equity account decreases One asset account increases and one asset account decreases One asset account increases and one stockholders' equity account increases

One asset account increases and one asset account decreases One asset account increases and one stockholders' equity account increases

Which of the following are possible effects on the accounting equation when recording a transaction that affects two accounts?

One asset account increases and one stockholders' equity account increases One asset account increases and one asset account decreases

Which of the following are on the debit side of the Accounts Payable T-account? Multiple choice question. Payments of purchases made on account Purchases on account Beginning balance

Payments of purchases made on account

What is the effect on total assets when a company buys a building in exchange for a 20-year note payable? total liabilities will decrease. Total assets will increase. There is no effect.

Total assets will increase.

Noodlecake purchases and receives $10,000 in computers, printers and desks in exchange for its promise to pay next month. What is the effect of this purchase on account on the accounting equation? (Check all that apply.) Multiple select question. Total assets remain the same Total stockholders' equity remains the same Total assets increase Total liabilities decrease Total stockholders' equity increases Total stockholders' equity decreases Total assets decrease Total liabilities remain the same Total liabilities increase Need help? Review these con

Total stockholders' equity remains the same Total assets increase total liabilities increase

Financial information needed to manage a company is provided by a(n) ______ system.

accounting system

A transaction may be recorded with an increase in an asset and a decrease in a(n) another asset stockholders' equity account liability account

another asset Reason: If one asset is increased, for the accounting equation to remain in balance either another asset is decreased, and/or a liability is increased, and/or a stockholders' equity account is increased. liability account

A classified balance sheet shows subtotals for current___________ and current____________

assets, liabilities

Which of the following is a current asset? Multiple choice question. Cash Common Stock Accounts Payable Note Payable

cash

the _______ principle requires that assets and liabilities be recorded at the amounts that were measurable at the time transactions occurred. (Enter only one word per blank.)

cost

Accounts Payable is increased with an entry on the _______ side of the T-account

credit

The Common Stock account is increased with an entry on the ________ side of the t account

credit

The formula for calculating the current ratio is ______

current assets divided by current liabilities

A company paid $500 for supplies that it purchased last month. The decrease in liabilities would be recorded with a Blank______ to Accounts Payable. Multiple choice question. credit debit

debit reason: Credits increase, not decrease, Accounts Payable.

The beginning balance in Acme's Cash account was $100,000. During the month, Acme issued $25,000 of common stock for cash. The balance in Acme's Cash account is now a: Multiple choice question. credit of $75,000. credit of $125,000. debit of $125,000. debit of $75,000.

debit of $125,000.

Which of these is classified as a noncurrent asset on the balance sheet? Multiple choice question. Cash Equipment Accounts Payable Common Stock Note Payable

equipment

The duality of effects refers to the fact that each transaction ______. is both analyzed and summarized affects both the chart of accounts and the accounting system must always affect an asset and either a liability or stockholders' equity account has at least two effects on the basic accounting equation

has at least two effects on the basic accounting equation

A company paid $5,000 cash to purchase equipment. The company recorded a debit to Equipment of $5,000 and a credit to Cash of only $500. This company's accounting records are ______. correct because debits equal credits correct because debits do not equal credits incorrect because debits do not equal credits incorrect because equipment should have been credited

incorrect because debits do not equal credits

Company X receives $10,000 from issuing common stock to its owners. The effect on the accounting equation is a(n) _____. (Check all that apply.) decrease in assets increase in assets increase in retained earnings decrease in liabilities decrease in stockholders' equity increase in stockholders' equity increase in liabilities

increase in assets, increase in stockholders equity

Accounts payable

is a liability account and represents amounts owed to suppliers.

When a company borrows from a bank by signing a formal agreement, an asset titled Cash is increased and a_________ titles _____________ __________________ is increased

liability, notes payable

What is the effect on total assets when a company purchases land for a cash payment of $10,000? increase decrease no effect

no effect

What is the effect on total assets when a company purchases a cash register for a cash payment of $1,200?

no effect Reason: Equipment is increased and Cash is decreased. Both are assets, thus there is no effect on total assets since they offset one reason: Equipment is increased and Cash is decreased. Both are assets, thus there is no effect on total assets since they offset one another.

All accounting systems Blank______. (Select all that apply.) Multiple select question. must be computerized record and summarize financial effects of transactions are Excel spreadsheets combine beginning balances with the activity during the accounting cycle to yield the ending balances for each account. follow the accounting cycle

record and summarize financial effects of transactions combine beginning balances with the activity during the accounting cycle to yield the ending balances for each account. follow the accounting cycle

The current ratio measures a company's: Multiple select question. total liabilities. total assets. short-term liquidity. ability to pay in the upcoming year. total assets to liabilities.

short-term liquidity. ability to pay in the upcoming year.

A classified balance sheet ______. Multiple choice question. shows subtotals for current assets and current liabilities shows changes in assets, liabilities, revenues and expenses is confidential and is not released outside the company shows only current assets and current liabilities

shows subtotals for current assets and current liabilities

When a business issues common stock, what does it give to its owners?

stock certificate

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, ______. (Check all that apply.)

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

True or false: A transaction can cause one asset to increase and different asset to decrease and still have the accounting equation balance. True false question.

t

A company purchased a new cash register in exchange for a cash payment of $1,200. The company recorded only an increase of $1,200 in the Equipment account. No entry was made to the Cash account. As a result, ______. (Check all that apply.) the accounting equation is not in balance total assets are too low the accounting equation is in balance total assets are correct

the accounting equation is not in balance total assets are too high

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 high total assets are correct total liabilities are correct total assets are too low total liabilities are too low total assets are too high

total assets are too low total liabilities are too low

Z Company bought land 20 years ago for $30,000. Over the last 20 years, the value of the land has doubled. The increase in the land's value Blank______. Multiple choice question. will be shown as a gain on the income statement will not be reported in Z Company's financial statements will be shown as an increase to the carrying value of the land on the balance sheet

will not be reported in Z Company's financial statements