ACCT 284 CH 2 READING HW

Assets have a normal ___ balance

Debit

When a company buys an asset on account ______.

When a company buys an asset on account ______.

The posting of the journal entry to record the purchase of land for $30,000 cash will include which of the following? (Select all that apply.)

a credit to the Cash T-account a debit to the Land T-account

A classified balance sheet shows subtotals for current _______ and current ___________

assets and liabilities

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

A transaction that involves an exchange of assets, liabilities and/or stockholders' equity between the company and someone else is called a(n)

external exchange

A company purchased a new cash register in exchange for a cash payment of $1,200. As a result of recording the purchase, ______. (Check all that apply.)

one asset is exchanged for another total assets remain the same

A company received $5,000 cash when it issued stock certificates to shareholders. The increase in cash would be recorded with a ______ to the Cash account.

debit

Classified Balance Sheet

shows subtotals for current assets and current liabilities

Which groups have claims to a business's assets? (Check all that apply.)

stockholders creditors

Liabilities have a normal ___ balance

credit

The beginning balance in Ace's Accounts Payable was $3,000. Ace then bought $200 of supplies paying cash. It also paid $500 of the amount that it owed for supplies purchased on account last month. The ending balance in Ace's Accounts Payable is a ______.

credit of $2,500

A company's beginning Equipment account is $100,000. It purchased $10,000 of new equipment and sold $4,000 of its equipment during the period. The company's ending Equipment balance equals a _____ balance.

$106,000 debit

An increase in retained earnings will be recorded with a ______

credit

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

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

Buildings Machinery Equipment Land

Burrows, Inc. borrowed $100,000 from Last Bank by signing a formal agreement to repay the bank in 10 years. Burrows' journal entry to record this transaction will include a debit to ______.

Cash

What does a business typically receive when it issues stock to owners?

Cash

The issuance of common stock is recorded with a debit to ______ and a credit to ______

Cash; Common Stock

Who has first claim to a business's assets should the company go out of business?

Creditors

Which of these is classified as a noncurrent asset on the balance sheet?

Equipment

True or false: If one asset increased, it must be the case that either liabilities or stockholders' equity increased by the same amount.

False

______ measures a company's ability to pay liabilities as they come due in the short run.

Liquidity

What is the effect on total assets when a company purchases land for a cash payment of $10,000?

No effect

Which accounts are affected by borrowing from a bank? (Select all that apply.)

Notes Payable Cash

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

Payments of purchases made on account

Company X issued $10,000 of common stock to its owners for cash. It recorded the transaction by increasing assets and increasing liabilities. Which of the following statements are correct? (Select all that apply)

Stockholders' equity will be too low. Liabilities will be too high.

Which of the following have normal debit balances? (Select all that apply.)

Supplies Cash Equipment

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.

What is the effect on total liabilities when a company buys a building in exchange for a 20-year note payable?

Total liabilities will increase.

A company typically receives _________ an asset, when it issues stock to its owners.

cash

Which of the following is a current asset?

cash

Z Best, Inc. issued $1,000,000 of common stock for cash. By accident, Z Best recorded the transaction by increasing cash and decreasing stockholders' equity. As a result of this entry, ______. (Check all that apply.)

common stock is understated stockholders' equity is understated the accounting equation is out of balance

A company paid $500 cash for a new printer. The entry to record this transaction would include a ______ to Cash.

credit

The beginning balance in Lucre's Cash account was $1,200. During the month, Lucre borrowed $5,000 cash from Last National Bank and paid a supplier $500. The balance in Lucre's Cash account is now a:

debit of $5,700.

Acme Enterprises issued $20,000 of stock in exchange for cash. The journal entry to record this transaction will include a Blank______ of $20,000.

debit to Cash credit to Common Stock

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. (Select all that apply.)

debit to Cash credit to Notes Payable

A company paid $5,000 cash to purchase equipment. The company recorded a debit to Equipment of $5,000 and a credit to Cash of only $500. This company's accounting records are ______.

incorrect because debits do not equal credits

The Mortgage Payable account is increased with an entry on the ____ side of the T-account. (Enter one word per blank.)

right

A classified balance sheet _________

shows subtotals for current assets and current liabilities

A company purchased a new cash register in exchange for a cash payment of $1,200. The company recorded only an increase of $1,200 in the Equipment account. No entry was made to the Cash account. As a result, ______. (Check all that apply.)

the accounting equation is not in balance total assets are too high

Morris Lest, Inc. purchased machinery for $10,000 cash. The effect of this transaction is to cause ______.

total assets to remain the same

The creditors' claim to a company's resources is represented by ______.

total liabilities

Business activities that affect the basic accounting equation and are recorded in the accounting system are called

transactions

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

Given a company's accounting equation at the end of the accounting period consists of Assets of $100,000, Liabilities of $60,000 and Stockholders' Equity of $40,000, match the correct amount the following descriptions.

- Assets of $100,000/Economic resources owned - Liabilities of $60,000/Creditors' claims to the economic resources - Stockholders' Equity of $40,000/Owners' claims to the economic resources

All transactions ______.

- affect assets, liabilities, and/or stockholders' equity - have at least two effects on the accounting equation

The accounting cycle consists of 3 steps, place the following steps in their correct order with the first step listed first.

1. Analyze 2. Record 3. Summarize

which of the following have normal credit balances

Accounts Payable Notes Payable Common Stock

Which of the following are possible effects on the accounting equation when recording a transaction that increases an asset by $100?

A liability account increases by $100 A decrease in another asset by $100 A stockholders' equity account increases by $100

$1,000 is posted to the left side of the Logo and Trademarks T-account. Which of the following might have been the entry that was recorded in the journal?

Debit Logo and Trademarks and credit Cash

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

Debits must equal ______ in each journal entry

credits

The beginning balance in Acme's Cash account was $100,000. During the month, Acme issued $25,000 of common stock for cash. The balance in Acme's Cash account is now a:

debit of $125,000