Chapters 3 and 4

Debits

increase assets and decrease liabilities.

A debit to an asset account indicates a(n)

increase in the asset.

Collection of a $600 Accounts Receivable

increases an asset $600; decreases an asset $600.

The purchase of an asset on credit

increases assets and liabilities.

A revenue generally

increases assets and stockholders' equity.

A revenue account

is increased by credits.

The purchase of an asset for cash

leaves total assets unchanged.

Are advanced receipts from customers treated as revenue at the time of receipt? Why or why not?

No, revenue cannot be recognized until the work is performed.

Credits decrease assets and increase liabilities true or false?

True

An account consists of

a title, a debit side, and a credit side.

A T-account is

a way of depicting the basic form of an account.

Receiving payment of a portion of an accounts receivable will

not affect total assets.

Which of the following describes the classification and normal balance of the Retained Earnings account?

Stockholders' equity, credit

An accountant has debited an asset account for $800 and credited a liability account for $700.

Debit a stockholders' equity account for $100.

A credit is not the normal balance for which account listed below?

Dividends account

In its simplest form, an account consists of all of the following except

explanation column.

Which of the following correctly identifies normal balances of accounts?

Assets - Debit Liabilities - Credit Common Stock - Credit Revenues - Debit Expenses - Credit

An accountant has debited an asset account for $900 and credited a liability account for $600.

Credit a different asset account for $300.

Which of the following items has no effect on retained earnings?

Land purchase

Which of the following describes the classification and normal balance of the Unearned Rent Revenue account?

Liability, credit

On March 1, 2017, Freeze Company hires a new employee who will start to work on March 6. The employee will be paid on the last day of each month. Should a journal entry be made on March 6? Why or why not?

No, hiring an employee is an important event; however it is not an economic event that should be recorded.

An investment by the stockholders in a business increases

assets and stockholders' equity.

Powers Corporation received a cash advance of $500 from a customer. As a result of this event,

assets increased by $500.

If total liabilities decreased by $4,000, then

assets must have decreased by $4,000, or stockholders' equity must have increased by $4,000.

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 $40,000.

If expenses are paid in cash, then

assets will decrease.

If a company buys a $700 machine on credit, this transaction will affect the

balance sheet only.

The payment of a liability

decreases assets and liabilities.

A paid dividend

decreases assets and stockholders' equity.

The best interpretation of the word "credit" is the

right side of an account.

The normal balance of any account is the

side which increases that account.

In recording an accounting transaction in a double-entry system

the amount of the debits must equal the amount of the credits.

The left side of an account is

the debit side.

When collection is made on Accounts Receivable,

total assets will remain the same.