Accounting Chapter 3 Review

At December 1, 2017, Coronado Industries Accounts Receivable balance was $15790. During December, Coronado had credit sales of $42300 and collected accounts receivable of $33840. At December 31, 2017, the Accounts Receivable balance is

$24,250 debit

Which is not part of the recording process? A. Entering transactions in a journal B. Preparing a trial balance C. Posting transactions D. Analyzing transactions

B. Preparing a trial balance

Which of the following is included in the journal entry for equipment purchased for $20,000 by issuing a note for the purchase?

Credit to notes payable.

Which of the following is the correct format for an account title? Why? A. Bold account name B. Underline account name C. Italicize account name D. Capitalize first letter of account name

D. Capitalize first letter of account name

Suppose that, as a firm, you have sought to raise capital and were able to do this by issuing $750,000 of common stock and taking on a $500,000 debt. What would your journal entries be?

Debit Cash $1,250,000, Credit Common Stock $750,000, Credit Notes Payable $500,000 Issuing Common Stock and obtaining a long-term loan will increase Cash.

Your firm borrowed $2,000,000 in the form of debt and issued $500,000 of common stock to expand your firm. What would be the total impact of your journal entries?

Debit Cash for $2,500,000, Credit Common Stock for $500,000, Credit Notes Payable $2,000,000

T/F: A trial balance would help in detecting a journal entry that is posted twice.

False.

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?

In Mega's general ledger: the ending balance on Cash will be correct. the ending balance on Accounts Payable will be too high the ending balance on Salaries Expense will be too low

The classification and normal balance of the Retained Earnings account is

Stockholder's Equity, credit

What could happen when an individual asset is increased?

There could be an equal decrease in a specific liability.

T/F: A trial balance proves the mathematical equality of debits and credits after the posting process.

True

A firm would record which of the following accounting entries after purchasing $1,750 of supplies on account?

a $1,750 increase to Supplies, and a $1,750 increase to Accounts Payable

Amounts are transferred to the ledger,

after transactions have been entered in the journal.

An error is _________ while an irregularity is ________.

an unintentional mistake; an intentional misstatement

An investment by the stockholders in a business increases

assets and stockholders' equity

Genesis Company buys equipment for $900 machine on credit. This transaction will immediately affect the

balance sheet only

Cash increases and accounts receivable decreases when a business

collects an accounts receivable

The normal balance for retained earnings is a

credit

Equipment costing $22400 is purchased by paying $5600 cash and signing a note payable for the remainder. The journal entry should include a

credit to notes payable

If total liabilities increase by $5,000 then

either assets increase by $5,000 or stockholders equity decreases by $5,000

Insight into the purpose of the entry is provided by the

explanation in the journal

A company uses their trial balance to prepare their

financial statements

A debit to an asset account indicates a(n) ________ in the asset.

increase

There must be a corresponding increase in liabilities or an increase in stockholders' equity if total assets are

increased.

The purpose of the ledger is to

keep in one place all the information about changes in specific account balances

If cash is received in advance from a customer...

liabilities will increase

Assets decrease when expenses are

paid in cash

Assets and stockholders' equity increase when

stockholders make an investment in the business

Joe Smith examined the sales slip related to a customer sale. Which part of the recording process is this action?

the analysis of each transaction

A _________ __________ is an accounting record that includes a list of accounts and their balances at a given time.

trial balance

Which of the following accounts would appear nearest to the bottom of a company's trial balance? A. Rent Expense B. Dividends C. Cash D. Accounts Receivable

A. Rent Expense

Assets increase when A. services are performed for cash. B. stockholders' equity decreases. C. there is a higher number on the asset side of the accounting equation. D. liabilities move from one side of the accounting equation to the other.

A. services are performed for cash

On March 12th, Washington Consultants performed consulting services and billed a client $3,200. Which account name would be placed in the first row of the journal entry form?

Accounts Recievable

What happens when a company issues common stock for $40,000 and uses $30,000 of the cash to purchase a truck?

Assets are increased by $40,000

What is the order of recording in the Trial Balance?

Assets, Liabilities and Owner's Equity, Revenue, Expenses

Which accounts normally have debit balances?

Assets, dividends, and expenses