1010 chapter two

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.

A company issued 1,000 shares of stock for $100,000. The increase in the Common Stock account would be recorded with a ____

credit

A company purchased supplies and promised to pay $200 for them next month. The increase in Accounts Payable would be recorded with a ______

credit

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

oodlecake 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.)

credit to Cash debit to Logo/Trademarks

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 Blank______ of $20,000.

credit to Notes Payable debit to Cash

Assets that will be used up or converted to cash within 12 months are assets.

current

Current assets divided by current liabilities is the ratio.

current

A company made a $1,000 payment on its $100,000, 20-year mortgage. The decrease in liabilities would be recorded with a Blank______ to Notes Payable

debit

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

debit

The double-entry system requires ______.

debits to equal credits total assets to equal total liabilities plus stockholders' equity

A company paid $200 cash for supplies that were purchased last month. However, the company recorded a debit to Accounts Payable of $200 and a credit to Cash of $20. This company's accounting records are ______.

incorrect, because debits do not equal credits

The formal document that lists all of the daily journal entries, but does not provide account balances, is the general

journal

the formal document that lists all of the daily journal entries, but does not provide account balances, is the general

journal

After transactions have been recorded in the ______, the entry is then posted to each ______ account affected by the transaction so that the balances can be summarized.

journal; ledger

T-accounts represent a simplified version of the ______.

ledger

The Equipment account is increased with an entry on the _______ side of the Equipment T-account.

left

On the balance sheet, Equipment is reported at its

original cost

When a company pays its supplier for amounts owed, its Cash and Accounts accounts are decreased.

payable

Journals are used to ______.

record transactions chronologically

The Common Stock account is increased with an entry on the side of the T-account.

right

A classified balance sheet ______.

shows subtotals for current assets and current liabilities

The beginning balance in Acme's Accounts Payable was $4,000. Acme then bought $100 of supplies on account and paid $700 of the amount that it owed for supplies purchased on account last month. The ending balance in Acme's Accounts Payable was a credit of ______.

$3,400

Melon-Cauli Grocers, Inc. had a $10,000 balance in its Accounts Payable account at the beginning of the month. During the month, it made $60,000 of purchases on account due within 1 month and paid $40,000 of the amounts owed. The Accounts Payable balance at the end of the month has a ______ balance.

$30,000 credit

A company's beginning Accounts Payable is $1,000. It had a $10,000 of purchases on account and paid $7,000 of the amounts owed. The Accounts Payable ending balance equals a Blank______ balance.

$4,000 credit

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.

$90,000 credit

n May, Pasta Disasta, Inc. paid its suppliers $500 that it owed for the pizza pans purchased and received in April. Which accounts are affected?

Accounts Payable is decreased. Cash is decreased.

What are current assets?

Assets that will be used up or converted to cash within 12 months

Which of the following is a current asset?

Cash

True or false: A profitable company will record more credits than debits.

False

Which of the following are non-current assets that are found on the balance sheet?

Land Machinery Equipment Buildings

Which of these is a non-current liability?

Mortgage Payable due in 20 years

Which of the following are on the debit side of the Accounts Payable T-account?

Payments of purchases made on account

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? (

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

The journal entry to record the purchase of land for $30,000 cash includes ______.

a debit to Land and a credit to Cash

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

A classified balance sheet shows subtotals for current and current

assets, 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, ______.

total assets are too low total liabilities are too low