ACCN ch 3

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 Payable C. Debit Accounts Receivable and credit Cash D. Debit Cash and credit Accounts Receivable

A. Debit Accounts Payable and credit Cash Phillips Industries would have recorded a credit to Accounts Payable for $8,250. On February 12th, when payment was made, Phillips Industries would record the following journal entry related to consulting services received: a debit to Accounts Payable for $8,520 (which offsets the credit to Accounts Payable recorded in January); a credit to Cash for $8,250.

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 not be transferred to the ledger, nor incorporated in the financial statements. B. The transaction will be transferred to the financial statements, but not be incorporated to appropriate accounts in the ledger. C. The transaction will be transferred to the ledger, but not to the financial statements. D. The transaction will be correctly analyzed, but will not be supported by the appropriate business documents.

A. The transaction will not be transferred to the ledger, nor incorporated in the financial statements. Transactions in the journal get transferred to the ledger accounts, which then become part of the amounts reported on financial statements

Within the past two weeks, Fanny's Flowers has completed each of the activities listed below. Of these activities, which should be recorded in the company's accounting records? A. purchased a new walk-in cooler B. fired one full-time employee C. hired two part-time employees D. entered into contract negotiations with a new floral wholesaler

A. purchased a new walk-in cooler decreases asset cash and increases asset equiptment

Paulson Oil account balances at January 31st include: Cash $70,000, Accounts Receivable $100,000, Common Stock $120,000 and Accounts Payable $50,000. During the month of February, the company collected $25,000 of its account receivable and paid $10,000 of its accounts payable. What is Paulson's cash balance on their February 28th trial balance? A. $95,000.00 B. $85,000.00 C. $60,000.00 D. $65,000

B. $85,000.00 70,000 beginning balance + $25,000 collection - $10,000 payment

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 debit to an asset account in order to offset the corresponding increase 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 credit 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 decrease 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.

B. 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. Stockholders' Equity = Common Stock + Revenues - Expenses - Dividends $3,000 increase in expenses causes a $3,000 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 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. B. 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. C. 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. D. 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.

B. 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. A credit to the revenue account represents an increase in revenues.

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

B. to prove the equality of the debit and credit amounts after posting

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. Equipment; Accounts Receivable. B. Accounts Receivable; Equipment. C. Equipment; Accounts Payable. D. Equipment; Cash.

C. Equipment; Accounts Payable. Equipment is an asset, and assets are increased through a debit, making a purchase on account means that the purchase was not paid for in cash, therefore there needs to be a matching credit on accounts payable

On December 30, Mega Industries pays employee salaries of $50,000 in cash. When posting the journal entries 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 high, while the ending balance for the Accounts Payable account will be too low. 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 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 too low, while the ending balance for the Accounts Payable account will be too high.

C. 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.

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

C. The elements of Stockholders' Equity are broken into different types of accounts; some are increased with debits and some with credits. Stockholders' equity is comprised of the balances of Common Stock & Retained Earnings, both of which are increased with credits.

Geyer Company has the following account balances: Accounts Receivable: $40, Accounts Payable: $45, Cash: $70, and Notes Payable: $65. If the Notes Payable balance is listed as $56 in the trial balance, what impact will this have on the accounts? A. The total credit balance will be $9 more than the total debit balance. B. There will be no impact on the accounts. C. The total credit balance will be $9 less than the total debit balance. D. The total debit balance will be $9 less than the total credit balance.

C. The total credit balance will be $9 less than the total debit balance.

During the month of July, Falcon Industries has cash receipts of $2,000, $7,000, and $5,500 and makes cash payments of $1,800, $7,200, and $3,000. If the Cash account started with a $0 balance, Falcon's Cash account balance at the end of July would have a A. credit balance of $2,500. B. debit balance of $3,500. C. debit balance of $2,500. D. credit balance of $3,500.

C. debit balance of $2,500. the total debits are $2,000 + $7,000 + $5,500 = $14,500 the total credits to Falcon's Cash account are $1,800 + $7,200 + $3,000 = $12,000. The debits total exceeds the credits total resulting in the cash account debit balance of $2,500

Which of the following accounting entries would you MOST expect to accompany a $2,500 increase in cash, and why? A. A $2,500 increase in notes payable, because this increase in stockholders' equity would need to be offset by a corresponding increase in assets. B. A $2,500 decrease in unearned service revenue, because unearned service revenue is considered an asset no matter when it is received. C. A $2,500 decrease in notes payable, because this reduction in liabilities would need to be offset by a corresponding increase in assets. D. A $2,500 increase in unearned service revenue, because unearned service revenue is considered a liability until the service is actually performed.

D. A $2,500 increase in unearned service revenue, because unearned service revenue is considered a liability until the service is actually performed. Both notes payable and unearned service revenue are considered liabilities (and not a component of stockholders' equity), while cash is considered an asset

Some of the balances on Carla's Cookies June 30th trial balance include Cash $100,000, Accounts Receivable $50,000, Equipment $25,000, and Accounts Payable $75,000. During the month of July, the company used cash to purchase $8,000 of equipment. How will this transaction affect the equipment account balance on the July 31st trial balance? A. A decrease of $4,000. B. A decrease of $8,000. C. An increase of $4,000. D. An increase of $8,000.

D. An increase of $8,000. The equipment account balance will increase by the dollar amount of the equipment being purchased

On November 15, Paulson Painting received a $6,000 cash payment from Apex Inc. in exchange for painting services to be provided in December. When posting the journal entries related to this payment, Paulson's accountant debits the Cash account for $6,000 and credits Service Revenue for $6,000. Which of the following statements best describes the results of this posting? A. in Paulson's general ledger, the ending balances for the Cash and Service Revenue accounts will be too high. However, the ending balance for the Unearned Service Revenue account will be too low. B. In Paulson's general ledger, the ending balance for the Cash account will be too low, the ending balance for the Service Revenue account will be too low, and the ending balance for the Unearned Service Revenue account will be too high. C. In Paulson's general ledger, the ending balances for both the Cash account and the Service Revenue account will be correct. D. In Paulson's general ledger, the ending balance for the Cash account will be correct. However, the ending balance for the Service Revenue account will be too high and the ending balance for the Unearned Service Revenue account will be too low.

D. In Paulson's general ledger, the ending balance for the Cash account will be correct. However, the ending balance for the Service Revenue account will be too high and the ending balance for the Unearned Service Revenue account will be too low. because the service has not yet been performed, it is unearned service revenue

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 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 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. C. 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. 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 high, while the ending balance for the Accounts Payable account will be too low.

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 high, while the ending balance for the Accounts Payable account will be too low. Supplies is an asset, so a debit will increase supplies, but we need a credit to accounts payable that shows what we owe to Indigo. We didn't credit accounts payable so the balance was too low, we also debited cash so that balance is too high

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. 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 C. 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 D. 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

D. 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 Retained earnings is affected when a company recognizes revenue, incurs expenses, or pays dividends; it is not affected by changes in a firm's liabilities. Here, payment of employee salaries increases the firm's expenses

Of the following sets of accounting entries, which one correctly records the purchase of a piece of equipment? A. a $16,000 decrease in notes payable and a $16,000 increase in equipment, both entered on the same date B. a $15,000 increase in cash and a $15,000 decrease in equipment, both entered on the same date C. a $14,000 decrease in cash, a $4,000 increase in notes payable, and a $10,000 increase in equipment, all entered on the same date D. a $5,000 decrease in cash, a $15,000 increase in notes payable, and a $20,000 increase in equipment, all entered on the same date

D. a $5,000 decrease in cash, a $15,000 increase in notes payable, and a $20,000 increase in equipment, all entered on the same date

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. credit to Notes Receivable B. credit to Equipment C. credit to Cash D. debit to Notes Payable

D. debit to Notes Payable debit to Equipment for $20,000; a credit to Cash for $5,000; and a credit to Notes Payable for $15,000.

You are the accountant responsible for creating financial documents and recording transactions. In which order will you perform the following actions related to these tasks? I. create financial statements II. record transactions in the ledger III. examine business documents IV. record transactions in the journal

III, IV, II, I