ACCT 303 - Chapter 6 SB

If a company has issued 10,000 shares of common stock and its Common Stock account has a balance of $100,000, then par value must equal _____.

$10

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 (4,000+100-700)

Acme Enterprises borrowed $20,000 from Last Bank on a 5-year note payable. Identify how the Notes Payable T-account will be affected when this transaction is posted. (Select all that apply.)

- $20,000 will be added to the ending balance which is on the credit side - $20,000 will be added to the credit side

Which of the following statements is (are) correct regarding a T-account? (Check all that apply.)

- A T-account represents a ledger account. - A T-account will show the debits and credits of the transactions affecting the account.

Z Best, Inc. issued 1,000,000 shares of $1 par value common stock for $20,000,000 in cash. The effect on the accounting equation effect is ______. (Select all that apply.)

- Common Stock is increased by $1,000,000 - Additional Paid-in Capital is increased by $19,000,000 - Total stockholders' equity is increased by $20,000,000 - Cash is increased by $20,000,000

Acme Enterprises borrowed $20,000 from Last Bank on a 5-year note payable. Acme's journal entry to record this transaction will include ______ of $20,000. (Select all that apply.)

- Credit to Notes Payable - debit to cash

Select the statements below that are correct in regards to entering transactions in a journal. (Check all that apply.)

- Credited accounts should be indented. - Total dollar amount of debits must equal the total dollar amount of credits.

Which of the following line items on a balance sheet results from an investing activity? (Check all that apply.)

- Equipment - Land - Buildings

Select the financing activities from the list below. (Check all that apply.)

- Issuing a note payable - Issuing stock

An amount posted on the right side of a T-account causes which accounts to increase? (Check all that apply.)

- Liabilities - Common stock - Notes Payable

Company X issued 10,000 shares of its $1 par value stock to its owners for $10,000 cash. It recorded the transaction by increasing assets and increasing liabilities. Which of the following statements are correct? (Check all that apply.)

- Liabilities will be overstated. - Stockholders' equity will be understated.

Which of the following are internal events? (Select all that apply.)

- Using supplies purchased and paid for last month - Earning revenues after cash is received in advance from customers

Par value of common stock is the ______. (Select all that apply.)

- amount established by the board of directors - legal amount per share

Which of these are long-term intangible assets? (Check all that apply.)

- patents - trademarks

Company X receives $10,000 from issuing 10,000 shares of $1 par value common stock to its owners. The effect on the accounting equation is ______. (Check all that apply.)

- stockholders' equity increases - asset increase

Z Best, Inc. issued $1,000,000 of stock for cash. Z Best recorded the transaction by increasing cash and decreasing common stock and additional paid-in capital. As a result of this entry, ______. (Check all that apply.)

- the accounting equation is out of balance - stockholders' equity is understated - contributed capital is understated

Identify on which side of the Cash T-account would the following amounts be shown? Select all that are correct.

- the beginning balance would be on the left side - decreases would be on the right side - increases would be on the left side - the ending balance would be on the left side

Click and drag on elements in order List the steps in the accounting cycle in chronological order.

1. Analyze transactions 2. Record journal entries in the general journal 3. Post amounts to the general ledger 4. Adjust revenues and expenses in the journal and post to the ledger 5. Prepare financial statements 6. Close revenues, expenses, gains, and losses to Retained Earnings

Place the following steps in the order that a transaction would be entered in the general journal. Instructions

1. Enter the transaction date 2. Enter name of account(s) debited and their amount(s) 3. Enter name of account(s) credited and their amount(s) 4. Enter an explanation for the entry

Which statement is false?

A trial balance is the same as a balance sheet.

On July 19, WX Company ordered $100 of supplies, promising to pay for them in August. The supplies were delivered and invoiced to WX on July 21 and WX paid $100 for them on August 10. The journal entry that WX made on August 10 would include a debit to ______.

Accounts Payable

What type of account appears on the left side of the accounting equation and is increased with amounts on the left side of T-accounts?

Asset

_______ are economic resources owned by the company.

Assets

What are long-term (noncurrent) assets?

Assets that will be used for more than one year

What are current assets?

Assets that will be used up or converted to cash within 12 months

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

A company purchased supplies and promised to pay $200 for them next month. The increase in Accounts Payable would be recorded with a ______.

Credit

A company paid $500 for supplies that it purchased last month. The decrease in liabilities would be recorded with a _______ to Accounts Payable.

Debit

______ to a corporation's stockholders' equity accounts cause its total stockholders' equity to_______

Debit; decrease

Smith Company purchased $8,000 of supplies on account. Show how to record this transaction in the T-accounts by selecting the correct answer below.

Enter $8,000 on left side of the Supplies account; enter $8,000 on the right side of the Accounts payable account.

Which statement is correct regarding entering transactions into the accounting equation?

If total assets increased, then the total of liabilities plus stockholders' equity must also have increased.

Which of the following describes the order in which assets are reported under IFRS?

Increasing order of liquidity

Which of these balance sheet line items is most likely a result of an investing activity?

Land

Which of these liability accounts would appear first on a company's balance sheet?

Note Payable (due in 5 months)

What does the company give when it borrows from a bank?

Notes payable

Which of the following is correct regarding posting a transaction?

Posting means to transfer journal information to a ledger.

Which of the following is an external transaction?

Purchasing supplies from a vendor

Which of the following is an external transaction?

Sale of merchandise to customers

When a business issues common stock, what does it give to its owners?

Stock certificates

MMM Pizza bought $1,500 of equipment agreeing to pay next month (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.

Which of the following accounting cycle steps describes the process of recording journal entries?

Transactions are recorded chronologically showing the accounts debited along with the corresponding accounts credited.

True or false: An external event is a transaction the firm conducts with a separate economic entity.

True

True or false: IFRS and US GAAP financial statements report similar items, but use different financial statement formatting.

True

Which is an internal transaction?

Using up insurance paid in advance

A company records the effects of transactions for a particular item in a(n) ______.

account

Which account is affected by recording the buying of goods on credit?

account payable

The purpose of an account is to ______.

accumulate the dollar effect of transactions for each financial statement item

A common characteristic of ___________ (assets/liabilities) is their ability to provide benefits to the company.

assets

Lox, Stock and Bagel, Inc., issued $100,000 of stock. It recorded the transaction by increasing Cash and decreasing Common Stock. As a result of this entry, the accounting equation will ___________.

be out of balance

Financing provided by owners is referred to as ____.

contributed capital

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

credit

Stockholders' equity appears on the _______ side of the accounting equation and are increased by amounts that appear on the _________ side of stockholder equity T-accounts. (Enter one word per blank.)

credit; credit

Brown Company purchased $900 of supplies on credit. Illustrate how to record the transaction to T-accounts by completing the following sentence. Accounts Payable would be ________ (debited,/credited) on the _______ (left/right) side of the T-account, and Supplies would be ________ (debited/credited) on the ________ (left/right) side of the T-account.

credited; right; debited; left;

Assets that will be used up or converted to cash within 12 months are ________ assets. (Enter only one word per blank.)

current

Liabilities that will be paid or fulfilled within 12 months are ______ liabilities.

current

A company received $2,000 of equipment and promised to pay for it next month. The increase in equipment would be recorded with a ______ to the Equipment account.

debit

If the effect of an entry on the accounting equation increased assets and liabilities, then the company may have ________.

debited Cash and credited Notes Payable

When entering a transaction into a general journal, the account(s) ________ (debited/credited) would be listed first and then the account(s) _________ (debited/credited) would be listed next.

debited; credited;

The totals on a trial balance reveal whether the total ________ equal the total _______. (Enter one word per blank.)

debits; credits

A number on the left side of a T-account means the account balance _______.

either increased or decreased depending on the account

A(n) ________ event involves an exchange between the company and a separate economic entity. (Enter one word per blank)

external

Common stock (or Contributed capital) on the balance sheet results from a(n) _______

financing activity

Borrowing from a bank is a ______ activity and causes ______ to increase.

financing; liabilities

Transactions are recorded chronologically in the ________.

general journal

When a company gives common stock to an investor, the effect is to _______.

increase stockholders' equity

After entering a transaction into the accounting equation, an increase in total assets can be accompanied by a(n) (increase/decrease) __________ in total liabilities and/or (equity/assets) __________. (Enter one word per blank.)

increase; equity

A(n) ________ transaction is an event that affects the financial position of the company but does not include an exchange with a separate economic entity. (Enter only one word per blank.)

internal

An event that affects the financial position of a company but does not include an exchange with a separate economic entity is a(n) _______ event.

internal

The document that shows the effects of transactions chronologically, but does not provide account balances, is the general _________

journal

A T-account is a simplified representation of a _____.

ledger account

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

left

Stockholders' equity is the residual interest in the assets of the entity after subtracting _____

liabilities

Mauricio, the owner of Pizza Aroma, spent $2,500 of his own money to take his family to Disney World. Because of the separate-entity assumption, Pizza Aroma's financial statements will report ______.

nothing about this trip

The separate entity assumption assumes the balance sheet of a corporation reports ______.

only the results of the business's activities

Transferring entries from the journal to the ledger is called _______.

posting

Journals are used to Blank______.

record transactions chronologically

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

right