Ch 2 Accounting

Providing services to customers for cash would have what effect on the accounting equation? A) Total assets increase; total stockholders' equity increases. B) Total assets increase; total liabilities decrease. C) Total liabilities decrease; total stockholders' equity increases. D) Total liabilities increase; total stockholders' equity decreases.

A) Total assets increase; total stockholders' equity increases.

A debit is used to increase which of the following accounts? a. Utilities Expense. b. Accounts Payable. c. Service Revenue. d. Common Stock

A. Utilities expense

When cash payments are made to stockholders, what is the effect on the company's accounts? A) Cash decreases and dividends increase. B) Cash increases and dividends decrease. C) Cash decreases and common stock decreases. D) Cash increases and common stock increases.

A.) Cash decreases and dividends increase

Providing services and receiving cash will: A) Increase assets and increase stockholders' equity. B) Increase assets and increase liabilities. C) Decrease assets and increase liabilities. D) Decrease liabilities and increase stockholders' equity.

A.) Increase assets and increase stockholders equity

Pumpkin Inc. sold $500 in pumpkins to a customer on account on January 1. On January 11, Pumpkin collected the cash from that customer. What is the impact on Pumpkin's accounting equation from the collection of cash? A) No net effect to the accounting equation. B) Decrease assets and increase liabilities. C) Increase assets and increase liabilities. D) Decrease assets and decrease liabilities.

A.) No net effect on the accounting equation

When a company pays employees' salaries for the current period, how will the basic accounting equation be affected? A) Stockholders' equity decreases. B) Revenues decrease. C) Expenses decrease. D) Liabilities decrease.

A.) Stockholders equity decreases

Borrowing cash from the bank would have what effect on the accounting equation? A) Assets increase and stockholders' equity increases B) Assets increase and liabilities increase. C) Liabilities increase and stockholders' equity decreases. D) Liabilities decrease and stockholders' equity increases.

B) Assets increase and liabilities increase.

The purchase of supplies with cash would be recorded as a. Debit Cash; Credit Supplies Expense. b. Debit Supplies; Credit Cash. c. Debit Cash; Credit Supplies. d. Debit Supplies Expense; Credit Cash.

B. debit supplies, credit cash

An expense has what effect on the accounting equation? A) Decrease liabilities. B) Decrease stockholders' equity. C) Increase assets. D) No effect.

B.) Decrease stockholders equity

Which of the following would increase assets and increase liabilities? A) Provide services to customers on account. B) Purchase office supplies on account. C) Pay dividends to stockholders. D) Receive a utility bill for the current month. Plan to pay bill beginning of next month.

B.) Purchase office supplies on account

Paying salaries to employees for the current period would have what effect on the accounting equation? A) Liabilities increase and stockholders' equity decreases. B) Assets decrease and liabilities decrease. C) Assets decrease and stockholders' equity decreases. D) Liabilities decrease and stockholders' equity increases.

C) Assets decrease and stockholders' equity decreases.

The payment for utilities of the current month would be recorded as a. Debit Cash; Credit Utilities Payable. b. Debit Utilities Expense; Credit Utilities Payable. c. Debit Utilities Expense; Credit Cash. d. Debit Utilities Payable; Credit Cash

C. Debit Utilities expense, credit cash

In the language of accounting, the term "debit" always means

C. left hand side

Receiving cash from customers before services are performed results in: A) Prepaid Assets. B) Service Revenue. C) Deferred Revenues. D) Accounts Receivable.

C.) Deferred revenue

Purchasing office supplies on account will: A) Not change assets. B) Increase assets and decrease liabilities. C) Increase assets and increase liabilities. D) Increase assets and increase stockholders' equity.

C.) Increase assets and increase liabilities

Which of the following transactions causes an increase in total assets? a. Pay employee salaries for the current month. b. Pay dividends to stockholders. c. Issue common stock in exchange for cash. d. Purchase office equipment for cash.

C.) Issue common stock in exchange for cash

Which of the following transactions causes an increase in stockholders' equity? a. Pay dividends to stockholders. b. Obtain cash by borrowing from a local bank. c. Provide services to customers on account. d. Purchase advertising on a local radio station.

C.) Provide services to customers on account.

Posting is the process of A.) Analyzing the impact of the transaction on the accounting equation. B.) Obtaining information about external transactions from source documents. C.) Transferring the debit and credit information from the journal to individual accounts in the general ledger. D.) Listing all accounts and their balances at a particular date and showing the equality of total debits and total credits.

C.) Transferring the debit and credit information from the journal to individual accounts in the general ledger.

A company receives a $50,000 cash deposit from a customer on October 15, but will not provide services until November 20. Which of the following statements is true? A) The company records service revenue on October 15. B) The company records cash collection on November 20. C) The company records deferred revenue on October 15. D) The company records nothing on October 15

C.) the company records deferred rev on Oct 15

77) Paying for supplies previously purchased would have what effect on the accounting equation? A) Assets decrease and stockholders' equity decreases. B) Assets increase and liabilities increase. C) Liabilities decrease and stockholders' equity increases D) Assets decrease and liabilities decrease.

D) Assets decrease and liabilities decrease.

When a company provides services on account, the accounting equation would be affected as follows: A) Assets increase. B) Revenues increase. C) Assets increase and liabilities decrease. D) Assets increase and stockholders' equity increases.

D) Assets increase and stockholders' equity increases.

A credit is used to increase which of the following accounts? a. Dividends. b. Insurance Expense. c. Cash. d. Service Revenue.

D. Service rev

A trial balance can best be explained as a list of A.) The income statement accounts used to calculate net income. B.) Revenue, expense, and dividend accounts used to show the balances of the components of retained earnings. C.) The balance sheet accounts used to show the equality of the accounting equation. D.) All accounts and their balances at a particular date.

D.) All accounts and their balances at a particular date.

When the company pays stockholders a dividend, what is the effect on the accounting equation for that company? A) Decrease stockholders' equity and increase assets. B) Increase liabilities and increase assets. C) Decrease assets and decrease liabilities. D) Decrease assets and decrease stockholders' equity.

D.) Decrease assets and decrease stockholders equity

Receiving cash from an account receivable: A) Increases revenue and decreases an asset. B) Decreases a liability and increases an asset. C) Increases an asset and increases revenue. D) Increases one asset and decreases another asset.

D.) Increases one asset and decreases another asset

What does a T-account represent?

an informal means to show the balance in an account.

What is a journal?

provides a chronological record of all transactions affecting a firm.

What is a journal entry?

used to describe the format for recording a transaction.