Accounting Exam 1

What do you do when receiving payments that have already been recorded as a revenue?

Decrease accounts receivable and increase cash

Accumulated depreciation:

lowers assets and expenses, lower net income

If the beginning and the ending balances in retained earnings are $14,000 and $18,000, respectively, and dividends during the year are $40,000, then net income for the year is: A.$44,000 B.$40,000 C.$4,000 D.Indeterminable from the data given

A. $44,000

Recording accrued salary expenses at the end of an accounting period causes an increase in salaries expense and: A.An increase in a liability. B.A decrease in an asset. C.An increase in an equity account. D.None of these

A. An increase in a liability

Company A owns a building. Which of the following statements regarding depreciation is false from an accounting perspective? A.As the value of the building decreases over time, it "depreciates". B.Depreciation is an estimated expense to be recorded each period during the building's life. C.As depreciation is recorded, owner's equity is reduced. D.As depreciation is recorded, total assets are reduced

A. As the value of the building decreases over time, it "depreciates"

Jeff Hensel purchased a new cash register system for his grocery store, paying $1,000 in cash and issuing . $6,000 note payable for the balance owed. As a result of this transaction, Jeff's balance sheet would reflect in a(n): A.Increase in assets and an increase in liabilities. B.Decrease in assets and an increase in liabilities. C.Decrease in liabilities and a decrease in assets. D.Increase in assets and a decrease in liabilities. E.Increase in assets and an increase in owner's equity

A. Increase in assets and increase in liabilities

A firm purchases assets on credit. This transaction: A.Increases both assets and liabilities. B.Decrease both assets and liabilities. C.Increases assets and decreases liabilities. D.Decreases assets and increases liabilities.

A. Increases both assets and liabilities

Prepaid expenses are: A.Paid and recorded in an asset account before they are used or consumed. B.Paid and recorded in an asset account after they are used or consumed. C.Incurred but not yet paid or recorded. D.Incurred and already paid or recorded

A. Paid and recorded in an asset account before they are used or consumed

Which of the following represents revenue for the month of March? A.Performed legal services for a client in March. Total amount of the invoice was $4,000, but no payment has been received as of the end of March. B.Collected cash of $2,400, in March on an account receivable. The receivable originated in January from services performed for a client. C.During March, received cash of $10,000 in exchange for issuing additional shares of capital stock. D.Borrowed $5,000 from National Bank on March 15

A. Performed legal services fir a client in March. Total amount of the invoice was $4,000 but no payment has been recovered as of the end of March

Deferrals: A.Postpone recognition of revenue or expense received or paid but not earned or incurred. B.Recognize revenue or expense received or paid but not earned or incurred. C.Recognize revenue or expense earned or incurred but not received or paid. D.Postpone recognition of revenue or expense earned or incurred but not received or paid

A. Postpone recognition of revenue or expense received or paid but not earned or incurred

Which of the following items represents a deferral? A.Prepaid insurance. B.Wages payable. C.Fees earned. D.Accumulated depreciation.

A. Prepaid insurance

The relationship between the income statement and the balance sheet may be described as follows: A.The income statement explains part of the change in owner's equity between two balance sheet dates. B.The balance sheet summarizes the change in net income occurring between successive income statements. C.The income statement summarizes the changes in cash occurring between two balance sheet dates. D.The assets shown in a balance sheet include all the revenue shown in the income statement

A. The income statement explains part of the change in owner's equity between two balance sheet dates

The bookkeeper down at the Saunders Construction Co. failed to accrue interest expense at year-end. This will result in: A.Understatement of liabilities, and an overstatement of net income and owners' equity. B.Overstatement of liabilities and an understatement of net income and owners' equity. C.Overstatement of assets, net income and owners' equity. D.Understatement of assets, net income, and owners' equity

A. Understatement of liabilities, and an overstatement of net income and owners' equity

Resources that a business uses to operate the business are called: A.Assets. B.Equity. C.Revenues. D.Liabilities

A. assets

Accrued revenues: A.At the end of one accounting period often result in cash receipts from customers in the next period. B.At the end of one accounting period often result in cash payments in the next period. C.Are also called unearned revenues. D.Are listed on the balance sheet as liabilities. E.Are recorded at the end of an accounting period because cash has already been received for revenues earned.

A. at the end of one accounting period often result in cash receipts from customers in the next period

On May 1, 2012, Perez Company paid $12,000 rent for a one year lease on equipment it uses in its operations. The adjusting entry at the end of the year: A.Decreases assets and stockholders' equity. B.Decreases assets and liabilities. C.Increases an expense and decreases a liability. D.Is not required.

A. decreases assets and stockholder's equity

The resources used by a firm during a particular period of time in the process of earning revenue are referred to as: A.Expenses B.Capital C.Net income D.Liabilities E.Assets

A. expenses

Which of the following transactions involves a deferral? A.Recording the prepayment of three month's rent. B.Recording the interest earned (but not received) on a certificate of deposit. C.Recording interest accrued on a note payable. D.Recording salaries of employees earned but not yet paid

A. recording the payment of three months rent

Recognized accrued wages earned by employees but not yet paid at the year-end will have what impact on a company's account classifications? A.Increase expenses, decrease net income, increase liabilities, decrease stockholders' equity. B.Increase expenses, decrease net income, decrease assets, decrease stockholders' equity. C.Increase expenses, decrease net income, increase liabilities, increase stockholders' equity. D.Increase expenses, increase net income, increase liabilities, increase stockholder's equity

A.Increase expenses, decrease net income, increase liabilities, decrease stockholders' equity.

If a company understates depreciation expense at the end of the year, what effect will this have on the major account classifications? A.Understate expenses, overstate net income, overstate assets, overstate stockholders' equity B.Understate expenses, overstate net income, understate assets, overstate stockholders' equity C.Understate expenses, overstate net income, understate assets, understate stockholders' equity D.Overstate expenses, understate net income, understate assets, understate stockholders' equity E.None of the above

A.Understate expenses, overstate net income, overstate assets, overstate stockholders' equity

The dual effects concept can be best described as follows: A.When a transaction is recorded in the accounting system, at least two effects on the basic accounting equation will result. B.When an exchange takes place between two parties, both parties must record the transaction. C.When a transaction is recorded, both the balance sheet and the income statement must be impacted. D.When a transaction is recorded, one account will always increase and one account will always decrease

A.When a transaction is recorded in the accounting system, at least two effects on the basic accounting equation will result.

What is the difference between accrual and deferral?

Accrual= work first, cash later Deferral= cash first, work later

Accrued wages:

Are recognized but not paid. They create wages payable liability which is a wage expense.

Harrigan and Sons provide legal services. On Sep 1, Harrigan contracted to provide 12 months legal services to a client. One that date, Harrigan collected a $36,000 retainer and began providing services. How much revenue would Harrigan report from that client for the year ending Dec 31? A.$36,000 B.$12,000 C.$9,000 D.$0

B. $12,000

The adjustment to record the completion of services for which clients had paid in advance would involve which of the following? A.A decrease in assets and an increase in equity. B.A decrease in liabilities and an increase in equity C.An increase in assets and a decrease in liabilities. D.An increase in liabilities and a decrease in equity

B. A decrease in liabilities and an increase in equity

Assets created by selling goods and services on credit are: A.Accounts payable B.Accounts receivable C.Liabilities D.Expenses E.Equity

B. Accounts receivable

The entry to record depreciation expense is an example of: A.A closing entry. B.An adjusting entry. C.Cash basis accounting. D.A reduction in owner's equity that does not affect the computation of net income for the period

B. An adjusting entry (what you do at the end of period to bring balances up to date)

The valuation of assets in the balance sheet is based primary upon: A.What it would cost to replace the assets. B.Cost, because cost is usually factual and verifiable. C.Current fair market value as established by independent appraisers. D.Cost, because in the event of liquidation, the assets would be sold at an amount equal to their original cost.

B. Cost, because it is usually factual and verifiable

A firm pays an account payable. This transaction: A.Increases both assets and liabilities. B.Decrease both assets and liabilities. C.Increases assets and decreases liabilities. D.Decreases assets and increases liabilities

B. Decrease both assets and liabilities

The matching concept refers to the "matching" of: A.Expenses and liabilities. B.Expenses and revenues. C.Assets and equity. D.Assets and liabilities

B. Expenses and revenues

If a journal entry recognizes expense, the other part of the entry might: A.Increase an asset account. B.Increase a liability account. C.Increase stockholder's equity. D.Recognize revenue.

B. Increase a liability account

The major accounting differences between interest paid to creditors and dividends paid to owners is: A.Interest paid decreases and dividends paid increases retained earnings. B.Interest paid is on the income statement and dividends paid are not. C.Interest paid is not on the income statement and dividends paid are. D.Both are treated identically by accountants.

B. Interest paid is on the income statement and dividends paid are not

The greenwood company purchased equipment costing $900. Greenwood paid $400 in cash and agreed to pay the remaining amount in thirty days. As a result of this transaction: A.Total assets increased by $400. B.Liabilities increased by $500. C.Total assets increased by $900. D.Both B and C

B. Liabilities increased by $500

Which of the following transactions changes only the mix of assets and does not affect liabilities or stockholders' equity? A.Borrowed $40,000 from First National Bank. B.Purchased land for cash. C.Received $3,800 for fees earned. D.Paid $4,000 for office salaries

B. Purchase land for cash

Which of the following transactions changes only the mix of assets and does not affect liabilities or stockholder's equity? A.Borrowed $40,000 from First National Bank B.Purchased land for cash C.Received $3,800 for fees earned D.Paid $4,000 for office salaries

B. Purchased land for cash

One purpose of making closing entires is: A.To reduce the number of expense accounts. B.To prepare the temporary accounts for the recording of the next period's activities. C.To establish new balances in the asset and liability accounts. D.To enable the accountant to prepare financial statements at the end of the accounting period. E.None of the above.

B. To prepare the temporary accounts for the recording of the next period's activities

The terms "risk" and "return" are related in that: A.Risky investments always generate low returns. B.When one goes up, the other usually goes up. C.They generally rise and fall somewhat inversely. D.Smaller investments usually incur smaller risk but generate higher returns

B. When one goes up, the other usually goes up

Depreciation expense may be described best as: A.Decline in the market value of an asset during the period. B.System allocation of the cost of long-lived assets to expense. C.Cash payments made during the period on loans used to finance the purchase of assets such as buildings and equipment. D.Cash being set aside each period to provide for the replacement of long-lived assets, such as buildings and equipment

B. system allocation of the cost of long-lived assets to expense

The purpose of the accrual basis of accounting is to: A.Report revenue when received. B.Improve the matching of revenue and expense in the proper period. C.Report expenses when cash disbursements are made. D.Improve the company's earnings per share

B.Improve the matching of revenue and expense in the proper period.

Which of the following does not involved a deferral? A.Receipt of advance fees from clients. B.Recording salaries of employees earned but not yet paid. C.Payment of six month's rent. D.Purchase of supplies on account.

B.Recording salaries of employees earned but not yet paid.

Total assets on a balance sheet prepared on any date must agree with which of the following? A.The sum of total liabilities and net income as shown on the income statement. B.The sum of total liabilities and owner's equity. C.The sum of total liabilities and cash. D.The sum of total liabilities, owner's equity, and net income

B.The sum of total liabilities and owner's equity.

If a company omitted a bill received for utilities at the end of the year, what effect will this have on the major account classifications? A.Understate expenses, overstate net income, understate assets, overstate stockholders' equity B.Understate expenses, overstate net income, understate liabilities, overstate stockholders' equity C.Understate expenses, overstate net income, understate liabilities, understate stockholders' equity D.Overstate expenses, understate net income, understate liabilities, overstate stockholders' equity E.None of the above

B.Understate expenses, overstate net income, understate liabilities, overstate stockholders' equity

Depreciation is the process of: A.Valuing an asset at its fair market value. B.Increasing the value of an asset over its useful life in a rational and systematic manner. C.Allocating the cost of a productive asset to expense over its useful life in a rational and systematic manner. D.Writing down an asset to its real value each accounting period

C. Allocating the cost of a productive asset to expense over its useful like in a rational and systematic manner

If total assets increased $20,000 during a period and total liabilities increased $12,000 during the same period, the amount and direction (increase or decrease) of the change in stockholders' equity for that period is: A.A $32,000 increase. B.A $32,000 decrease. C.An $8,000 increase. D.An $8,000 decrease

C. An $8,000 increase

An asset decrease resulting from consumption of resources to earn revenue is: A.A net loss. B.A liability. C.An expense. D.An asset source transaction.

C. An expense

If a transaction causes an asset account to decrease, which of the following related effects may occur? A.An increase of equal amount in an owner's equity account. B.An increase in a liability account. C.An increase of equal amount in another asset account. D.An increase in the combined total of liabilities and owner's equity.

C. An increase of equal amount in another asset account

The accountant for the McCarthy Company forgot to make an adjusting entry to record depreciation for the current year. The effect of this error would be: A.An overstatement of net income and an understatement of assets B.An overstatement of assets offset by an understatement of owner's equity. C.An overstatement of assets, net income and owner's equity. D.An overstatement of assets and of net income and an understatement of owner's equity.

C. An overstatement of assets net income, and owner's equity

The accountant for Linville Co. forgot to make an adjusting entry to record revenue earned but not yet billed to customers. The effect of this error is: A.An overstatement of assets and of net income offset by an understatement of stockholders' equity. B.An overstatement of net income and an understatement of assets. C.An understatement of assets, net income, and stockholders' equity. D.An overstatement of liabilities offset by an understatement of stockholders' equity

C. An understatement of assets, net income, and stockholder's equity

Which of the following statements about owners' equity is NOT correct? A.Expenses decrease owners' equity. B.Contributions of owners increase owners' equity. C.Dividends distributed to owners increase owners' equity. D.Revenues increase owners' equity. E.All of the above statements are correct

C. Dividends distributed to owners increase owners' equity

Which of the following adjustments is necessary if a company has earned one-third of a customer's prepayment of insurance premium? A.Increase Unearned Revenue B.Increase Cash C.Increase Insurance Revenue D.Increase Insurance Expense

C. Increase insurance revenue

The balance in the unearned rent account for Jones Co, as of Dec 31 is $1,200. If Jones Co. failed to record the adjusting entry or $600 of rent earned during Dec, the effect on the balance sheet and income statement for Dec would be: A.Assets understated by $600; net income overstated by $600. B.Liabilities understated by $600; net income understated by $600. C.Liabilities overstated by $600; net income understated by $600. D.Liabilities overstated by $600; net income overstated by $600

C. Liabilities overstated by $600; net income understated by $600

When expenses exceed revenues in a given period (and there are no gains or losses), A.Owner's equity will not be impacted. B.Owner's equity will be increased. C.Owner's equity will be decreased. D.One cannot determine the impact on owner's equity without additional information

C. Owner's equity will be decreased

When expenses exceed revenues in a given period and dividends are paid: A.Owners' equity will not be impacted. B.Owners' equity will be increased. C.Owners' equity will be decreased. D.Cannot determine the impact on Owners' equity without additional information.

C. Owners' equity will be decreased

Which of the following financial statement elements is closed at the end of an accounting cycle? A.Liabilities B.Equity C.Revenues D.Assets

C. Revenues

Perry's puppies needed additional equipment, which was purchased on credit for $600. Which of the following is not true regarding the accounting for the transaction? A. Equipment increased by $600 B. Accounts payable increased by $600 C. Expenses increased by $600 D. All of the above

C. expenses increased by $600

At the end of October, two harbor marina received a bill for fuel used in October. Payment is not due until Nov 30. This transaction: A.Should not be recorded in the accounting records until November. B.Causes a decrease in assets and in owner's equity in November, when the bill is paid. C.Should be recorded as an expense in October, regardless of the payment date. D.Is recorded as a liability in October, but is not considered an expense until paid.

C. should be recorded as an expense in October, regardless of the payment date

Which of the following items would be an example of revenue? A.Cash investments made by owners. B.Cash received from a bank loan. C.Cash received from customers for services provided. D.All of the above.

C.Cash received from customers for services provided.

Under the accrual basis of accounting: A.Cash must be received before revenue is recognized. B.Net income is calculated by matching cash outflows against cash inflows. C.Events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received. D.The ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles

C.Events that change a company's financial statements are recognized in the period they occur rather than in the period in which cash is paid or received.

On Jan 24, Niche Co. collected $5,700 it had billed its clients for services rendered on Dec 31. How would you record the Jan 24 transaction, using accrual basis? A.Increase Cash, $5,700; decrease Fees Earned, $5,700. B.Increase Accounts Receivable, $5,700; increase Fees Earned, $5,700. C.Increase Cash,$5,700; decrease Accounts Receivable, $5,700. D.Increase Cash, $5,700; increase Fees Earned, $5,700

C.Increase Cash,$5,700; decrease Accounts Receivable, $5,700

If a company overbilled customers for services provided at the end of the year, what effect will this have on the major account classifications? A.Overstate expenses, understate net income, understate assets, overstate stockholders' equity B.Overstate revenues, overstate net income, understate assets, overstate stockholders' equity C.Overstate revenues, overstate net income, overstate assets, overstate stockholders' equity D.Overstate revenues, overstate net income, overstate assets, understate stockholders' equity E.None of the above

C.Overstate revenues, overstate net income, overstate assets, overstate stockholders' equity

The receipt of $8,000 of cash for fees earned was recorded by Langley Consulting as an increase in cash of $8,000 and a decrease in retained earnings (revenues) of $8,000. What is the effect of this error on the accounting equation? A.Total assets will exceed total liabilities and stockholders' equity by $8,000. B.Total assets will be less than total liabilities and stockholders' equity by $8,000. C.Total assets will exceed total liabilities and stockholders' equity by $16,000. D.The error will not affect the account equation

C.Total assets will exceed total liabilities and stockholders' equity by $16,000.

When should a company report the cost of an insurance policy as an expense? A.When the company first signs the policy. B.When the company pays for the policy. C.When the company receives the benefits from the policy over its period of coverage. D.When the company receives payments from the insurance company for its insurance claims

C.When the company receives the benefits from the policy over its period of coverage.

In which of the following situations would the largest amount be recorded as a expense of the current period (a month)? A.$2,000 is paid for equipment with a useful life of five years. B.$800 is paid for a two-year fire insurance policy. C.$10,000 cash dividends are paid to stockholders. D.$500 is paid to an attorney for legal services rendered during the current period

D. $500 is paid to an attorney for legal services rendered during the current period

Recognition of revenue may result in which of the following? A.A decrease in a liability. B.An increase in a liability. C.An increase in assets. D.A and C.

D. A and C

Declaration and payment of cash dividends result in: A.An increase in expenses. B.A decrease in net income. C.An increase in stockholder's equity. D.A decrease in retained earnings.

D. A decrease in retained earnings

Adjusting entries: A.Assign revenues to the period in which they are earned. B.Help to properly measure the period's net income or net loss. C.Bring asset and liability accounts to correct balances. D.All of the above

D. All of the above

The recognition of an expense may be accompanied by which of the following? A.An increase in assets. B.A decrease in liabilities. C.A decrease in revenue. D.An increase in liabilities

D. An increase in liabilities

On June 27, Medical Technologies, Inc., performed extensive tests on lab specimens submitted by several customers and sent invoices totaling $2,500, due in 30 days. A.No revenue from rendering these services should be recorded until payment is received. B.This situation causes an increase in assets and in revenue in June, but has no effect on owner's equity until payment is received. C.Revenue is earned in June, but assets are not increased until payment is received. D.Assets, revenue, and owner's equity are increased in June, regardless of when payment is received

D. Assets, revenue, and owners' equity are increased in June, regardless of when the payment is received

The two major divisions of stockholders' equity are: A.Revenues and expenses B.Sales and cost of goods sold C.Assets and liabilities D.Contributed capital and retained earnings

D. Contributed capital (common stock) and retained earnings

Which of the following direct effects on the fundamental accounting model is NOT possible as a result of a transaction analysis? A.Decrease a liability and decrease an asset. B.Increase owners' equity and increase an asset. C.Increase an asset and decrease an asset. D.Decrease owners' equity and increase an asset. E.All of the above effects are possible.

D. Decrease owners' equity and increase an asset

Most assets must be reported on the balance sheet at: A.Their current replacement cost. B.Fair market value. C.An amount estimated by the company's management. D.Historical cost.

D. Historical cost

Guy Inc. pays its employees on the tenth day of each month, If the adjusting entry for accrued wages on Dec 31 were not made, which of the following would result? A.Assets would be overstated. B.Stockholders' equity would be understated. C.Net income for the period would be understated. D.Liabilities would be understated. E.Net income for the period would be unaffected.

D. Liabilities would be understated

At the first of the month Max paid a total of $2,400 for six months' rent in advance. When he recorded the payment, he entered $2,400 into the Prepaid Rent account. At the end of the month, what adjustments should Max make? A. Increase prepaid rent by $400 and increase rent expense by $400 B. Decrease prepaid rent by $2,400 and decrease rent expense by $2,400 C. Decrease prepaid rent by $400 and decrease rent expense by $400 D. None of the above

D. None of the above

Which of the following accounts is a permanent account (an account that is not closed)? A.Rent Expense B.Service Revenue C.Dividends D.Prepaid Insurance

D. Prepaid insurance

The balance sheet item that represents the portion of stockholders' equity resulting from profitable operation of the business is: A.Accounts receivable. B.Cash. C.Capital stock. D.Retained earnings.

D. Retained earnings

An accrued: A.Revenue has been collected but not earned. B.Expense has been paid but not matched with earnings. C.Expense has been paid and matched with earnings. D.Revenue has been earned but not collected.

D. Revenue has been earned but not collected

Examples of accruals are: A.Salaries payable, depreciation of equipment, and prepaid insurance. B.Taxes payable, rent received in advance, and office supplies. C.Prepaid rent, revenue received in advance, and prepaid salaries. D.Salaries payable, interest receivable, and taxes payable.

D. Salaries payable interest receivable, and taxes payable

Which of the following accounts is a temporary account? A.Prepaid Insurance B.Unearned Subscriptions Revenue C.Retained Earnings D.Subscription Revenue

D. Subscription revenue

Paying for a two-year insurance policy in advance will have what impact on a company's account classifications? A.Increase assets, increase stockholders' equity. B.Increase assets, increase liabilities. C.Increase assets, decrease liabilities. D.This transaction will have no impact on major classification totals.

D. This transaction will have no impact on major classification totals.

If a company fails to adjust unearned revenue for services that has been performed, what effect will this have on the major account classification? A.Understate revenues and net income, overstate assets, understate stockholders' equity. B.Understate revenues and net income, overstate liabilities, overstate stockholders' equity. C.Understate revenues and net income, understate liabilities, understate stockholders' equity. D.Understate revenues and net income, overstate liabilities, understate stockholders' equity.

D. Understate revenues and net income, overstate liabilities, understate stockholders' equity

Revenue is recognized in most businesses: A.When the customer's order is received. B.Only if the transaction creates an account receivable. C.Periodically throughout the performance of a service. D.Upon completion of the sale or when services have been performed and the business obtains the right to collect the sales price. E.When cash from a sale is received.

D. Upon completion of the sale or when services have been performed and the business obtains the right to collet the sales price

A statement of retained earnings shows: A.The changes in the Cash account occurring during the accounting period. B.The revenue, expense, and dividends of the accounting period. C.The types of assets which have been purchased with the earnings retained during the accounting period. D.The changes in the Retained Earnings account occurring during the accounting period.

D. the changes in the retained earnings account occurring during the accounting period

When a concept promotions company collects cash for ticket sales two months in advance of the show date, which of the following accounts if affected? A.Accrued Liability. B.Accounts Receivable. C.Prepaid Expense. D.Unearned Revenue

D. unearned revenue

An adjusting journal entry to recognize accrued salaries payable would cause which of the following? A.A decrease in assets and owner's equity. B.A decrease in assets and liabilities. C.An increase in expenses, liabilities, and owner's equity. D.An increase in expenses and liabilities and a decrease in owner's equity.

D.An increase in expenses and liabilities and a decrease in owner's equity

The balance of an unearned revenue account: A.Appears in the balance sheet as a component of stockholders' equity. B.Appears in the income statement along with other revenue accounts. C.Appears in a separate section of the income statement for revenue not yet earned. D.Appears in the liability section of the balance sheet

D.Appears in the liability section of the balance sheet

If a company fails to adjust a prepaid rent account for rent that has expired, what effect will this have on that month's financial statements? A.Failure to make an adjustment does not affect the financial statements. B.Expenses will be overstated and net income and owner's equity will be understated. C.Assets will be overstated and net income and owner's equity will be understated. D.Assets will be overstated and net income and owner's equity will be overstated.

D.Assets will be overstated and net income and owner's equity will be overstated.

The purchase of land for $50,000 cash was incorrectly recored as an increase in land and an increase in notes payable. Which of the following statements is correct? A.The accounting equation will not balance because cash is overstated by $50,000. B.The accounting equation will not balance because notes payable are overstated by $50,000. C.The accounting equation will not balance because assets will exceed liabilities by $50,000. D.Even though a recording error has been made, the accounting equation will balance

D.Even though a recording error has been made, the accounting equation will balance

If the supplies account indicated a balance of $2,250 before adjustment on May 31 and supplies on hand at May 31 total $950, the adjustment would be: A.Increase Supplies, $950; decrease Supplies Expense, $950. B.Increase Supplies, $1,300; decrease Supplies Expense, $1,300. C.Increase Supplies Expense, $950; decrease Supplies, $950. D.Increase Supplies Expense, $1,300; decrease Supplies, $1,300

D.Increase Supplies Expense, $1,300; decrease Supplies, $1,300

Recording depreciation on plant assets will have what impact on a company's account classifications? A.Decrease expenses, increase net income, increase assets, decrease stockholders' equity. B.Increase expenses, decrease net income, decrease assets, increase stockholders' equity. C.Increase expenses, decrease net income, increase assets, decrease stockholders' equity. D.Increase expenses, decrease net income, decrease assets, decrease stockholders' equity

D.Increase expenses, decrease net income, decrease assets, decrease stockholders' equity

Bon-sheri corporation has completed a transaction that has cayse both its total assets and its total liablities to increase by $7,000. This transaction could have been the purchase of a : A.Truck, paying $4,000 cash and issuing a note payable for $7,000. B.Drill press,paying $2,000 cash and issuing a $5,000 note payable. C.$7,000 truck on account. D.All of the above answers are correct. E.Answers A. and C. are correct

E. Answers A and C are correct

Which of the following changes describes the collection of $1,000 from accounts receivable? A.Assets and owner's equity increase by $1,000. B.Assets and owner's equity decrease by $1,000. C.Assets and liabilities increase by $1,000. D.Assets and liabilities decrease by $1,000. E.No changes in total assets, liabilities, or owner's equity

E. No changes in total assets, liabilities, or owner's equity

Boone Real Estate signed a four-month note payable in the amount of $40,000 on September 1. The note requires interest at an annual rate of 12%. The amount of interest to be accrued at the end of September is: A.$4,800 B.$4,000 C.$1,200 D.$1,600 E.None of the above

E. none of the above

The cost of the asset at the time it was required and gets reported on the balance sheet

Historical Cost

A deferral:

Is paid in advance but defer the use

Depreciation:

Reduces assets, increases expences

An expense is:

The using up of an asset or incurring a liability