Acct 101 Ch.3 Quiz

What is the appropriate order for a company's chart of accounts? -Assets, liabilities, revenues, expenses, stockholders' equity -Assets, liabilities, stockholders' equity, revenues, expenses -Assets, liabilities, stockholders' equity, expenses, revenue -Assets, revenues, expenses, liabilities, stockholders' equity

B. Assets, liabilities, stockholders' equity, revenues, expenses The order of the accounts in the chart of accounts follows the order of the sections of the balance sheet and income statement, namely assets, liabilities, stockholders' equity, revenues, and expenses.

Which accounts normally have debit balances? -Assets, expenses, and retained earnings -Assets, expenses, and revenues -Assets, dividends, and expenses -Assets, liabilities, and dividends

C. Assets, dividends, and expenses Assets, dividends and expenses have normal debit balances.

What effects occur when an account payable is paid with cash? -Increases assets and decreases liabilities -Decreases stockholders' equity and decreases liabilities -Decreases assets and decreases liabilities -Decreases assets and increases stockholders' equity

C. Decreases assets and decreases liabilities Cash, an asset, will decrease. Accounts payable, a liability, will decrease.

The effect on the basic accounting equation of performing services for cash are to -increase assets and decrease stockholders' equity. -increase assets and increase liabilities. -increase assets and increase stockholders' equity. -increase liabilities and increase stockholders' equity.

C. increase assets and increase stockholders' equity. When services are performed for cash, assets are increased and stockholders' equity is increased.

If an expense is paid with cash -assets will decrease. -expenses will decrease. -retained earnings will increase. -liabilities will increase.

A. assets will decrease. When an expense is paid with cash, cash (an asset) will be decreased.

When a trial balance balances, it is an indication that -debits equal credits. -the account balances are correct. -all journal entries have been posted. -all transactions have been journalized.

A. debits equal credits When the trial balance balances, it simply means that all of the debits equal all of the credits as shown in the document.

Retained earnings is decreased by expenses. owner's investments. revenues. assets.

A. expenses The costs that a firm incurs when operating its business (expenses) cause retained earnings to decrease.

A revenue account -is increased by credits. -is decreased by credits. -is increased by debits. -has a normal balance of a debit.

A. is increased by credits. Revenues are increased by credits

Which statement about an account is true? -In its simplest form, an account consists of two parts. -An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items. -There are separate accounts for specific assets and liabilities but only one account for stockholders' equity items. -The right side of an account is the debit side.

B. An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items. An account is an individual record of specific account detail.

If a company receives cash from a customer before performing services for the customer, then -assets increase and stockholders' equity increases. -assets increase and liabilities decrease. -assets increase and liabilities increase. -assets decrease and liabilities increase.

C. assets increase and liabilities increase. When cash is received from a customer, the asset Cash increases, and a liability such as Unearned Revenues increases.

In what section of the statement of cash flows would the purchase of office equipment for $10,000 cash appear? -Financing activities -Operating activities -In the notes to the statement of cash flows -Investing activities

D. Investing activities The purchase of long-lived assets is considered an investing activity.

Accounts with normal debit balances include -liabilities and expenses. -stockholders' equity and revenues. -assets and liabilities. -expenses and assets.

D. expenses and assets. Expenses and assets both have normal debit balances.

Receipt of an unearned revenue -increases an asset; increases a revenue. -decreases a liability; increases stockholders' equity. -decreases a revenue; increase stockholders' equity. -increases an asset; increases a liability.

D. increases an asset; increases a liability. This event increases cash, and increases an associated liability such as unearned revenue.

Debits -decrease assets and increase liabilities. -decrease both assets and liabilities. -increase both assets and liabilities. -increase assets and decrease liabilities.

-increase assets and decrease liabilities.

An account has $300 on the debit side and $900 on the credit side. How much is the account balance? -Debit of $1,200 -Credit of $600 -Debit of $600 -Credit of $900

When credits are greater than debits, credits minus debits results in a credit balance of $600. The debit of $300 is subtracted from the credit of $900, which results in a credit of $600.

Genesis Company buys equipment for $900 machine on credit. This transaction will immediately affect the -income statement and retained earnings statement only. -balance sheet only. -income statement only. -income statement, retained earnings statement, and balance sheet.

B. balance sheet only. When equipment is purchased on credit, assets are increased and liabilities are increased. These are both balance sheet accounts.

At September 1, 2017, Five-O Inc. reported retained earnings of $136,000. During the month, Five-O generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and paid dividends of $2,000. What is the balance in retained earnings at September 30, 2017? $137,000 credit $8,000 credit $142,000 credit $136,000 debit

C. $142,000 credit First net income is calculated as revenues of $20,000 (Cr.) less expenses of $12,000, which is $8,000. Then the beginning balance of Retained Earnings, $136,000 (Cr.) plus net income of $8,000 less dividends of $2,000 (Dr.) results in the ending balance of retained earnings of $142,000 (Cr.).

If total liabilities increase by $5,000 then -assets and stockholders' equity each increase by $2,500. -assets decrease by $5,000. -assets increase by $5,000, or stockholders' equity decrease by $5,000. -stockholders' equity increase by $5,000.

C. assets increase by $5,000, or stockholders' equity decrease by $5,000. The accounting equation of Assets = Liabilities + Stockholders' Equity can be used to solve this problem. If assets increase on the left side of the equation and liabilities increase by the same amount on the right side of the equation, the equation will balance. Likewise, if stockholders' equity decreases on the right side of the equation and liabilities increase by the same amount on the right side of the equation, the equation will balance.

Payment of a dividend -increases expenses; decreases cash. -increases retained earnings; increases expenses. -decreases cash; decreases retained earnings. -decreases cash; increases stockholders' equity.

C. decreases cash; decreases retained earnings. Payment of dividends reduces both cash and retained earnings.

Accounts with normal credit balances include -revenues and expenses. -revenues and assets. -liabilities and stockholders' equity. -assets and liabilities.

C. liabilities and stockholders' equity. Liabilities and stockholders' equity accounts both have normal credit balances.