ACCT CHPT 3

During 2017, Gibson Company assets decreased $50,000 and its liabilities decreased $90,000. Its stockholders' equity therefore: (a)increased $40,000. (b)decreased $140,000. (c)decreased $40,000. (d)increased $140,000.

(a)increased $40,000

Which statement about an account is true? (a)In its simplest form, an account consists of two parts. (b)An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items. (c)There are separate accounts for specific assets and liabilities but only one account for stockholders' equity items. (d)The left side of an account is the credit, or decrease, side.

(b)An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items.

Which is not part of the recording process? (a)Analyzing transactions. (b)Preparing an income statement. (c)Entering transactions in a journal. (d)Posting journal entries.

(b)Preparing an income statement.

The effects on the basic accounting equation of performing services for cash are to: (a)increase assets and decrease stockholders' equity. (b)increase assets and increase stockholders' equity. (c)increase assets and increase liabilities. (d)increase liabilities and increase stockholders' equity.

(b)increase assets and increase stockholders' equity.

Debits: (a)increase both assets and liabilities. (b)decrease both assets and liabilities. (c)increase assets and decrease liabilities. (d)decrease assets and increase liabilities.

(c)increase assets and decrease liabilities.

A ledger: (a)contains only asset and liability accounts. (b)should show accounts in alphabetical order. (c)is a collection of the entire group of accounts maintained by a company. (d)provides a chronological record of transactions.

(c)is a collection of the entire group of accounts

Which accounts normally have debit balances? (a)Assets, expenses, and revenues. (b)Assets, expenses, and retained earnings. (c)Assets, liabilities, and dividends. (d)Assets, dividends, and expenses.

(d)Assets, dividends, and expenses.

Paying an account payable with cash affects the components of the accounting equation in the following way: (a)Decreases stockholders' equity and decreases liabilities. (b)Increases assets and decreases liabilities. (c)Decreases assets and increases stockholders' equity. (d)Decreases assets and decreases liabilities.

(d)Decreases assets and decreases liabilities.

A revenue account: (a)is increased by debits. (b)is decreased by credits. (c)has a normal balance of a debit. (d)is increased by credits.

(d)is increased by credits.

Posting: (a)normally occurs before journalizing. (b)transfers ledger transaction data to the journal. (c)is an optional step in the recording process. (d)transfers journal entries to ledger accounts

(d)transfers journal entries to ledger accounts

Which of the following is the correct sequence of events? -Analyze a transaction; post it to the ledger; record it in the journal -None of the answer choices provides the correct sequence -Analyze a transaction; record it in the journal; post it to the ledger -Record a transaction in the journal; analyze the transaction; post it to the ledger

-Analyze a transaction; record it in the journal; post it to the ledger

Payment of a dividend -decreases cash; decreases retained earnings. -increases expenses; decreases cash. -decreases cash; increases stockholders' equity. -increases retained earnings; increases expenses

-decreases cash; decreases retained earnings.

Accounting Equation

Assets= Liabilities +stock equity

Which of the following is not one of the primary types of the financing activities in the statement of cash flows? Paying dividends Borrowing money Buying equipment Issuing shares of stock

Buying equipment (That is considered investing activities)

What type of account is unearned revenue? Asset Expense Liability Revenue

Liability

Expenses decrease retained earnings? True or False

True

Genesis Company buys a $900 machine on credit. This transaction will affect the: (a)income statement only. (b)balance sheet only. (c)income statement and retained earnings statement only. (d)income statement, retained earnings statement, and balance sheet.

balance sheet only. When equipment is purchased on credit, assets are increased and liabilities are increased. These are both balance sheet accounts.

Accounts are listed on the trial balance in the order in which they are posted. the order that they appear in the ledger. chronological order. alphabetical order.

the order that they appear in the ledger.