Finance Unit 2 Test

The Cash T-account of Franklin, Inc. has a beginning balance of $156,000. During the year, $732,000 was debited and $723,000 was credited to the account. What is the ending balance of cash?

$165,000

If the company now purchases office equipment on account for $60,000, the accounting equation will change to: (Goel Enterprises) $720,000 = $360,000 + $360,000

$780,000 = $420,000 + $360,000

Debits to which accounts result in an increased balance ?

Assets and expenses

When we bill customers for services rendered we _________ and__________ (credit, accounts receivable, revenue, debit)

Debit accounts receivable, credit revenue

A company incurred $40,000 (to be paid next year) for the current year's insurance coverage. What would the effect of this transaction be on the current year's accounting equation?

No effect on Assets; $40,000 increase in Liabilities; $40,000 decrease in Stockholders' Equity

Lets make money, inc engaged in the following business activities: 1. Purchased $3,000 of office equipment agreeing to pay it back over two years. 2. Completed 50% of the work for a customer that paid $10,000 for the services up front. Which of the following would be the two journal entries to record these transactions?

Office Equipment - $3,000 Notes Payable - $3,000 Unearned Revenue - $5,000 Professional Fees Earned - $5,000 **in that order**

The term credit refers to :

The right side of an account

The accountant at Befuddled Company recorded the purchase of $1,800 of supplies for cash as a debit to Supplies for $1,800 and a credit to Accounts Payable for $1,800.

Total liabilities would be overstated by $1800

An account is an individual record of increases and decreases in a specific asset , liability , or stockholders ' equity item . (T/F)

True

Each transaction entered in a general journal must have equal dollar amounts of debits and credits . (T/F)

True

One reason for taking a trial balance is to determine if the debits and credits in the general ledger are equal .

True

The first step in the accounting cycle is to analyze transactions from source documents . (T/F)

True

The declaration and payment of a dividend by a corporation causes :

A decrease in assets and a decrease in retained earnings .

The first accounting cycle , in proper sequence , are :

Analyze transactions from source documents and record transactions in a journal .

Steve's Coffee house paid $1,500 in advertising fees for the current month and made the required journal entry reflecting this transaction. Without knowing any additional information, what occurred?

Current assets increase

When Trina received her paycheck, she realized that her employer made an error in computing her wages, and overpaid her by $7,800. Trina promptly returned the excess amount. When her employer receives a check from her in the amount of the overpayment, which of the following journal entries will be made by the employer?

Debit Cash $7,800 and Credit Wages Expense $7,800

When a shareholder purchases stock we __________ and ____________ (cash, common stock, credit, debit)

Debit Cash and Credit Common Stock

When we buy equipment using our company credit card we _______________ and __________________ (equipment, accounts payable, credit, debit)

Debit Equipment and Credit Accounts payable

Richardson Company purchased a new car for $60,000 by paying $24,000 cash and trading in an old car with a recorded net cost and market value of $20,000. They also signed a Note for $16,000. The required journal entry will not:

Debit Notes Payable for $16,000

Which of the following journal entries would we use to record the payment of a $3,000 accounts payable balance (originally incurred for the purchase of an office computer)?

Debit accounts payable, credit cash

When we play employee salaries we __________ and ___________ (debit, credit, wage expense, employees payable)

Debit wage expense, credit employees payable

Recording the borrowing of money for which a note is signed involves:

Debiting Cash and Crediting Notes Payable

A general ledger contains multiple trial balances

False

All accounts have normal balances on the debit side . (T/F)

False

The last step in the accounting cycle is preparing the financial statements . (T/F)

False

When a firm purchases equipment for cash , both assets and stockholders ' equity increase . (T/F)

False