ACG assignment 2

Select all that apply If a transaction decreases cash by $100, the balance sheet will balance if which of the following occurs? (Select all that apply)

-Another asset is increased -A liability is decreased

Select all that apply Shriver Corp. borrows $25,000 from a bank and signs a two-year promissory note. What accounts will be affected by this transaction and what is the effect?

-Cash increases -Notes payable increases

Select all that apply London Corp. issues 1,000 shares of stock for $20 per share. What are the effects of this transaction?

-Cash is increased. -Common stock is increased.

Select all that apply Jeremy issues 5,000 shares of common stock for $10 per share. Which of the following accounts are affected? (Select all that apply.)

-Common stock -Cash

Select all that apply Pluto Inc. borrows $3,000 from Second National Bank by signing a promissory note. Recording this transaction will include which of the following?

-Debit cash -Credit note payable

Select all that apply Farmer, Inc. purchases a tractor for $80,000 cash. Recording this transaction will require which of the following?

-Debit equipment -Credit cash

Select all that apply Geo Corporation issues stock to investors for $100,000. Recording this transaction will include which of the following?

-Debit to cash -Credit common stock

Select all that apply What are the effects of providing services on account to customers?

-Increase assets -Increase retained earnings

Select all that apply Price Company provides cleaning services to customers for $10,000 cash. What are the effects of this transaction on the accounting equation? (Select all that apply.)

-Increase retained earnings -Increase assets

Select all that apply Which of the following are stockholder equity accounts?

-Retained earnings -Common stock

Select all that apply Indicate which situations would require Zenda Company to record revenue in the current period. (Select all that apply.)

-Zenda performs services on account. -Zenda performs services for cash.

Select all that apply The two roles of financial accounting are to:

-communicate information to external parties for decision making purposes. -measure business activities of the company

Select all that apply Roland Corporation borrows $10,000 from the bank by signing a promissory note. Recording this transaction will include:

-credit to notes payable -debit to cash

Select all that apply The types of accounts which affect retained earnings are

-dividends. -expenses. -revenues.

Select all that apply The type of information included in an account includes

-the account title. -columns for debits and credits.

Accounts receivable are assets which represent

Amounts owed by customers

The accounting equation is:

Assets = Liabilities + Stockholders' Equity

In a double-entry accounting system, a(n)-- represents the left side of the account.

Blank 1: debit

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

Blank 1: external

A transaction is initially recorded in the journal, and then subsequently posted to the general--

Blank 1: ledger

An increase in revenues increases---- , which increases retained earnings, which increases stockholders' equity. (Enter one word per blank)

Blank 1: net Blank 2: income

The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as-- . (Enter only one word.)

Blank 1: posting or post

Consistent with the-- recognition principle, companies record revenue at the time goods are provided to customers. (Enter only one word.)

Blank 1: revenue

A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n----

Blank 1: trial Blank 2: balance

Analysis of Mueller Company's accounts show that as a result of a single transaction, both cash and notes payable increased by $10,000. Which of the following transactions would have caused this increase?

Borrowing cash and signing a promissory note

The last step for analyzing the effect of transactions is:

Confirm that assets are equal to liabilities plus stockholders' equity

Porter Company pays for three years of rent in advance. Which of the following is used to record this transaction?

Debit prepaid rent; credit cash.

Resnick purchases supplies on account. Which of the following is used to record this transaction?

Debit supplies; credit accounts payable

Torrence purchases supplies for cash. Which of the following is used to record this transaction?

Debit supplies; credit cash.

What is the effect of dividends on retained earnings?

Decrease

What is the effect of expenses on retained earnings?

Decrease

The first step for analyzing the effect of transactions is:

Determine one account in the accounting equation that will increase or decrease

True or false: A ledger provides a chronological record of all transactions affecting the firm.

False

True or false: A balance sheet is a list of all accounts and their balances showing that debits equals credits.

False Reason: A trial balance is a list of all accounts and their balances showing debits equals credits. A balance sheet presents assets, liabilities, and stockholders' equity.

True or false: The two functions of financial accounting are to measure business activities and prepare tax returns.

False Reason: The two functions of financial accounting are to measure business activities and communicate those measurements to external parties for decision-making purposes.

Which of the following contains a list of transactions affecting each account and the account's balance?

General ledger

When services are provided on account, what is the effect on stockholders' equity?

Increase

LMN Enterprises performs accounting services for a client for $3,000 cash. What is the effect on the accounting equation?

Increase assets and increase retained earnings

What effect does revenue have on retained earnings?

Increases

What is the effect of net income on retained earnings?

Increases retained earnings

Analyze the following journal entry. What is the transaction that required this entry?

Issue stock to investors

Which of the following represents a common advantage of a computerized accounting system?

Journal entries are instantly posted to the ledger

Which of the following includes the list of transactions affecting each individual account and the account's balance?

Ledger

Analyze the following t-accounts. What is the transaction that required the posting of item (4)?

Pay rent in advance

Analyze the following journal entry. What is the transaction that required this journal entry?

Purchase equipment for cash

Analyze the following journal entry. What is the transaction that required this entry?

Purchase supplies on account

Jonathan Company's journal shows a debit to supplies and a credit to accounts payable. This means that Jonathan:

Purchased supplies on account

What are the three components of retained earnings?

Revenues, expenses, and dividends

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

True Reason: An external transaction occurs with a separate economic entity.

True or false: The accounting equation must always remain in balance.

True Reason: In a double entry system, debits must equal credits, and the balance sheet must always balance.

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.

account; general ledger

Accounts receivable are

assets

Smith Company's journal shows a debit to cash and a credit to notes payable, both for $15,000. This indicates that Smith Company:

borrowed $15,000 cash and signed a note

Analyze the following t-accounts. The transaction that required the posting for item (2) is

borrowing cash from the bank.

The two components of stockholders' equity are

common stock and retained earnings

Carnival Company issues common stock to investors for $50,000. Which of the following is used to record this transaction?

debit cash/credit common stock

Sinclair purchased equipment for $100,000 cash. Recording this transaction would include a

debit to equipment

Lassiter Industries purchased equipment for $140,000. Lassiter expects to use the equipment over the next 10 years. Recording this transaction would include a

debit to equipment $140,000.

An account should have an account title, account number, a place for the date of the transaction, and two columns for

debits and credits.

A t-account has space at the top for the account title and two sides for recording ______ and ______ to the account.

debits; credits

Expenses will cause retained earnings to

decrease

Dividends paid to stockholders will cause retained earnings to

decrease.

Which type of account is increased with a debit?

expense

Revenues cause retained earnings to

increase

Net income ______ retained earnings.

increases

Klick's journal shows a debit to cash and a credit to common stock. This journal entry indicates that Klick:

issued shares to stockholders

A chronological record of all economic events affecting a firm are recorded in a(n)

journal

A debit is on the ______ side of the account.

left

Stockholders' equity is increased by revenues because revenues increase

net income.

Gondel Company's journal shows a debit to prepaid rent and a credit to cash. This means that Gondel Company

paid rent in advance.

The process of transferring information from the journal to the ledger is referred to as

posting.

Pilot Company pays for two years of rent in advance. Recording this transaction would include a debit to

prepaid rent

The purpose of a general ledger is to

provide in a single location the list of transactions affecting each account and the account's balance.

Ursula Company's bookkeeper records revenue relating to a customer transaction. This indicates that the company

provided goods or services to a customer.

Indigo Company's journal reveals that equipment was debited and notes payable was credited, both for $10,000. Indigo Company must have

purchased equipment and signed a note for the purchase price

The purpose of a journal is to

record a chronological listing of every transaction for a company.

Which type of account is increased with a credit?

revenue

The accounting equation is: Assets = Liabilities +

stockholders equity

A simplified version that is used informally for analysis instead of drawing a formal general ledger account is referred to as a:

t-account

When should revenue be recorded?

when services are performed