According Ch. 2 Assignments

On December 31, 2017, Cash had a balance of $100,000. During 2018, there were $1,100,000 debits and $950,000 credit posted to Cash. The December 31, 2018 balance must equal $_________.

$250,000

The _______ principle is used to measure the amount assets are to be recorded at when exchange. a. separate entity b. assets c. cost d. cash

c. cost

A classified balance sheet shows subtotals for current _______ and current ________. (Enter one word per blank)

assets; liabilities

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

current

List the components of a classified balance sheet in the proper order in accordance with GAAP. List from top to bottom. - Non-current assets - Non-current liabilities - Current assets - Current liabilities - Stockholders' equity

1 - Current assets 2 - Non-current assets 3 - Current liabilities 4 - Non-current liabilities 5 - Stockholders' equity

A company paid $500 cash for a new printer. The entry to record this transaction would include a _________ to Cash. a. creditare b. credit c. debitor d. debit

b. credit

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

b. debit

Acme Enterprises issued $20,000 of stock in exchange for cash. The journal entry to record this transaction will include a ______ of $20,000. a. credit to Notes Payable b. debit to Notes Payable c. credit to Cash d. debit to Cash e. credit to Common Stock

d. debit to Cash e. credit to Common Stock

Which of these is classified as a non-current asset on the balance sheet? a. Accounts Payable b. Common Stock c. Notes Payable d. Cash e. Equipment

e. Equipment

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 _______. a. $3,400 b. $4,000 c. $4,700 d. $2,500 e. $4,600

a. $3,400

True or false: An exchange of promises is a transaction that affects the accounting equation. a. False b. True

a. False An exchange of promises is not a transaction and this does not affect the accounting equation until later when it receives and gives something of value.

Increases and decreases in individual accounts, as well as an ending balance, are shown in a(n) ______. (Check all that apply) a. T-account b. journal c. ledger d. income statement e. balance sheet

a. T-account c. ledger

In May, Pizz Aroma ordered $1,200 of supplies and promised to pay the supplier next month. As soon as it receives the supplies in May, Pizza Aroma should record a _______ of $1,200. (Select all that apply) a. credit to Account Payable b. debit to Notes Payable c. debit to Supplies d. credit to Cash e. credit to Supplies

a. credit to Account Payable c. debit to Supplies

Squid Roe, Inc., purchased equipment that cost $20,000 by promising to pay $15,000 next month and paying the remainder in cash. The journal entry to record this transaction includes a ________. (Select all that apply) a. credit to Accounts Payable of $15,000 b. credit to Cash of $5,000 c. debit to Equipment of $5,000 d. debit to Equipment of $20,000 e. debit to Account Payable of $20,000 f. credit to Accounts Payable of $20,000 g. debit to Cash of $5,000

a. credit to Accounts Payable of $15,000 b. credit to Cash of $5,000 d. debit to Equipment of $20,000

Which of the following are considered business documents? (Check all that apply) a. invoices b. Bill's c. stock certificates d. stockholders' equity e. retained earnings f. net income

a. invoices b. Bill's c. stock certificates

Every transaction involves a(n) ______. a. receiving and giving something of value b. increase in stockholders' equity c. increase in assets d. exchange of promises

a. receiving and giving something of value

A company has current liabilities of $3,000 and current assets of $4,000. From this information we can conclude that the company _______. a. should be able to pay it's current liabilities on time b. should be able to pay its non-current liabilities on time c. must have purchased some non-current assets during the last year d. may not be able to pay its current liabilities on time

a. should be able to pay it's current liabilities on time

The trail balance at year end shows ________. a. the ending balance in each T-account b. only deceases in T-accounts c. only increases in T-accounts

a. the ending balance in each T-account

Which of these are currently liabilities? (Check all that apply) a. Common Stock b. Accounts Payable c. Equipment d. Land e. Notes Payable due in 5 months f. Notes Payable due in 2 years

b. Accounts Payable e. Notes Payable due in 5 months

Which of the following are non-current assets that are found on the balance sheet? (Check all that apply) a. Accounts Payable b. Buildings c. Equipment d. Supplies e. Notes Payable f. Land g. Machinery

b. Buildings c. Equipment f. Land g. Machinery

Which of the following are characteristics of Notes Payable and not Accounts Payable? (Select all that apply) a. Notes Payable are liabilities; Accounts Payable are not b. Notes Payable are amounts borrowed from a bank; Accounts Payable are not c. Only Notes Payable have interest charges d. Notes Payable are amounts owed to creditors; Accounts Payable are not e. Notes Payable are documented with formal documents called notes

b. Notes Payable are amounts borrowed from a bank; Accounts Payable are not c. Only Notes Payable have interest charges e. Notes Payable are documented with formal documents called notes

Which of the following are true about Notes Payable and Accounts Payable? (Select all that apply) a. Notes Payable are not interest-bearing, Accounts Payable are. b. Notes Payable are interest-bearing, Accounts Payable are not. c. Both Notes Payable and Accounts Payable are liabilities. d. The repayment of both Notes Payable and Accounts Payable cause liabilities to increase. e. Both Notes Payable and Accounts Payable are interest-bearing.

b. Notes Payable are interest-bearing, Accounts Payable are not. c. Both Notes Payable and Accounts Payable are liabilities.

When a company purchases an asset but only pays for a portion of it and owes the remainder, which of the following is true? a. The asset is debited for the amount paid. The amount owed will be debited to the asset once paid. b. The asset is debited for the amount paid plus the amount owed. c. The asset is credited for the amount paid plus the amount owed. d. The asset is credited for the amount paid. The amount owed will be debited to the asset once paid.

b. The asset is debited for the amount paid plus the amount owed.

All accounting system ________. (Select all that apply) a. must be computerized b. record and summarize financial effects of transactions c. are Excel spreadsheets d. follow the accounting cycle e. combine beginning balances with the activity during the accounting cycle to yield the ending balances for each account

b. record and summarize financial effects of transactions d. follow the accounting cycle e. combine beginning balances with the activity during the accounting cycle to yield the ending balances for each account

Which of the following are characteristics of Notes Payable and not Accounts Payable? (Select all that apply) a. Notes Payable are amounts owed to creditors; Accounts Payable are not. b. Only notes Payable have interest charges. c. Notes Payable are amounts borrowed from a bank; Accounts Payable are not. d. Notes Payable are documented with formal document called notes. e. Notes Payable are liabilities; Accounts Payable are not.

c. Notes Payable are amounts borrowed from a bank; Accounts Payable are not. d. Notes Payable are documented with formal document called notes.

What is the effect on total liabilities when a company buys a building in exchange for a 20-year note payable? a. There will be no effect. b. Total liabilities will decrease. c. Total liabilities will increase.

c. Total liabilities will increase.

A current ratio that equals 2.0 suggests that a ________. (Check all that apply) a. company's total stareholders' equity are larger than its current liabilities b. company will have trouble paying its current liabilities on time c. company has the ability to pay its current liabilities d. company's current assets are larger than its current liabilities

c. company has the ability to pay its current liabilities d. company's current assets are larger than its current liabilities

Ace Electronics purchased a $35,000 delivery truck in exchange for a 4-year promissory note. The journal entry to record this transaction would include a _______ of $35,000. a. credit to Equipment b. credit to Cash c. debit to Equipment d. debit to Note Payable e. credit to Note Payable

c. debit to Equipment e. credit to Note Payable

Identify what a company gives and receives when it invests in equipment by paying cash and signing a 2-year note. (Check all that apply) a. It receives cash b. it gives equipment c. it gives a promissory note d. it receives equipment e. it receives a promissory note f. it receives stock g. it gives stock h. it gives cash

c. it gives a promissory note d. it receives equipment h. it gives cash

A ledger is used to ________. a. make a balance sheet unnecessary b. prove that debits equal credits c. show increases and decreases in individual accounts, as well as an ending balance d. report the results of operations to stockholders, creditors, and managers

c. show increases and decreases in individual accounts, as well as an ending balancep

Current assets by current liabilities is the _______ ratio.

current

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

current

Squid Roe, Inc., purchased equipment that cost $20,000 by issuing a 6%, $15,000 promissory note and paying the remainder in cash. The effect on the accounting equation are _______. a. Note Payable, a stockholders' equity account, is decreased by $15,000 b. Cash, a stockholders' equity account, is decreased by $5,000 c. Note Payable, a liability is increased by $20,000 d. Equipment, an asset, is increased by $20,000 e. Cash, an asset, is decreased by $5,000 f. Note Payable, a liability is increased by $15,000 g. Cash, an asset, is increased by $5,000 h. Equipment, an asset, is increased by $5,000

d. Equipment, an asset, is increased by $20,000 e. Cash, an asset, is decreased by $5,000 f. Note Payable, a liability is increased by $15,000

Buildings and equipment owned and used by a company are ______. a. current liabilities b. non-current liabilities c. current assets d. non-current assets

d. non-current assets

Account titles are ______. a. inherited by some of the nobility in France b. never capitalized c. listed in alphabetical order on the balance sheet d. the names given to the items exchange in transactions based on a company's chart of accounts

d. the names given to the items exchange in transactions based on a company's chart of accounts

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 ________. a. $2,500 b. $4,600 c. $4,700 d. $4,000 e. $3,400

e. $3,400

The formal document that lists all of the daily journal entries, but does not provide account balances, is the _______. (Enter one word only)

journal

The effect of journal entries on each account is summarized in the ______. (Enter one word per blank)

ledger