Chapter 2 Transaction Analysis
) A company did not record the receipt and payment of an utility bill for $2,500. Is the trial balance out of balance? A) No. B) Yes, by $2,500. C) Yes, by $5,000. D) Yes, by an indeterminate amount.
A
) A company incorrectly recorded a receipt of cash on account. Accounts Receivable was debited for $1,400 and Cash was credited for $1,400. Is the trial balance out of balance? A) No. B) Yes, by $1,400. C) Yes, by $2,800. D) Yes, by $4,200.
A
) A company omitted a journal entry to record service revenue of $12,000 on account. Is the trial balance out of balance? A) No. B) Yes, by $12,000. C) Yes, by $24,000. D) Yes, by an indeterminate amount.
A
) A company receives an utility bill and immediately pays it. With this transaction: A) stockholders' equity is decreased. B) expenses are decreased. C) assets are increased. D) liabilities are increased.
A
) A company sold land for the same price that they paid for it last year. When entering this transaction in the journal, there will be a: A) credit to Land. B) debit to Land. C) debit to Accounts Payable. D) credit to Accounts Receivable.
A
) A journal entry that debits Cash and credits Accounts Receivable indicates that: A) payment was received on account. B) payment was made on account. C) revenue increased. D) revenue decreased.
A
) A single-step income statement reports different types of revenue that include: A) sales revenue and service revenue. B) income tax expense, utilities expense, rent expense. C) operating income, income before income taxes, and net income. D) cost of goods sold and operating expenses.
A
) Company A received cash and issued stock to a new stockholder. In recording this transaction: A) Cash would be debited. B) Common Stock would be debited. C) Cash would be credited. D) Retained Earnings would be credited.
A
) Interest payable, income tax payable and salary payable are all examples of: A) accrued liabilities. B) prepaid expenses. C) expenses of future periods. D) retained earnings.
A
) Paying a repair bill as soon as it was received would: A) increase expenses. B) increase liabilities. C) increase stockholders' equity. D) decrease revenues.
A
) Which of the following items would NOT be included in the journal entry for a transaction? A) the names of the employees involved in recording the transaction B) the date the transaction occurred C) the titles of the accounts debited D) the dollar amount of the transaction
A
A company recorded a cash payment incorrectly. Accounts Receivable was debited for $1,900 and Cash was credited for $1,900. The correct entry would debit Accounts Payable for $1,900 and credit Cash for $1,900. Is the trial balance out of balance? A) No. B) Yes, by $1,900. C) Yes, by $3,800. D) Yes, by an indeterminate amount.
A
An important rule of debits and credits is: A) credits increase revenue accounts. B) debits decrease asset accounts. C) debits increase liability accounts. D) credits increase asset accounts.
A
Muddle Company performs a service for one of its customers and immediately collects the cash. This transaction will: A) have no effect on liabilities. B) decrease net income. C) decrease Retained Earnings. D) increase Accounts Receivable.
A
What is the last step in the journalizing process? A) Record the transaction in the journal. B) Post the journal entry to the ledger. C) Determine whether each account is increased or decreased by the transaction. D) Specify each account affected by the transaction and classify each account by type.
A
Which transaction increases stockholders' equity? A) sale of common stock B) dividends that are declared and paid C) expenses greater than revenues for the period D) payment of operating expenses
A
) A business paid $2,500 on account. The journal entry would: A) debit Accounts Receivable for $2,500 and credit Revenue for $2,500. B) debit Accounts Payable for $2,500 and credit Cash for $2,500. C) debit Cash for $2,500 and credit Retained Earnings for $2,500. D) debit Cash for $2,500 and credit Accounts Payable for $2,500.
B
) A business paid $50,000 cash to purchase equipment. The business would: A) debit Equipment for $50,000 and credit Accounts Payable for $50,000. B) debit Equipment for $50,000 and credit Cash for $50,000. C) debit Cash for $50,000 and credit Notes Payable for $50,000. D) debit Accounts Payable for $50,000 and credit Cash for $50,000.
B
) A company borrowed $15,000 from the bank by signing a long-term note. How does this transaction affect the accounting equation? A) Add $15,000 to Cash and add $15,000 to Accounts Payable. B) Add $15,000 to Cash and add $15,000 to Notes Payable. C) Add $15,000 to Cash and add $15,000 to Retained Earnings. D) Add $15,000 to Accounts Receivable and add $15,000 to Accounts Payable.
B
) A company had credit sales of $40,000 and cash sales of $14,000 during the month of May. Also during May, the company paid wages of $13,000 and utilities of $2,800. It also received payments from customers on account totaling $8,000. At the beginning of May, the company had a cash balance of $25,000. What is the company's cash balance at the end of May? A) $23,200 B) $31,200 C) $39,000 D) $47,000
B
) An owner makes an investment of cash into the business and receives shares of stock. This transaction is recorded as a: A) debit to Common Stock and a credit to Cash. B) debit to Cash and a credit to Common Stock. C) debit to Cash and a credit to Retained Earnings. D) debit to Cash and a credit to Stockholder Revenue.
B
) Company Z sells land for cash for the same amount it paid for it three years ago. When the company records this transaction: A) assets and stockholders' equity are increased. B) one asset is increased and another asset is decreased. C) one liability is increased and another liability is decreased. D) assets are increased and liabilities are decreased.
B
) Every journal entry: A) must increase at least one account and decrease at least one account. B) must debit at least one account and credit at least one account. C) is recorded in either the journal or the ledger. D) affects both an income statement account and a balance sheet account.
B
) If a company buys inventory on account: A) cash decreases. B) accounts payable increases. C) net income increases. D) total assets remain the same.
B
) Information for the trial balance is obtained from the: A) journal. B) ledger. C) balance sheet. D) income statement.
B
) On May 1, a company provided legal services for a new client. The legal fee was $2,000 and the client paid, by check, before leaving the office that day. How does this transaction affect the accounting equation? A) Add $2,000 to Cash and subtract $2,000 from Service Revenue. B) Add $2,000 to Cash and add $2,000 to Retained Earnings. C) Add $2,000 to Cash and subtract $2,000 from Accounts Receivable. D) Add $2,000 to Cash and subtract $2,000 from Accounts Payable.
B
) Receiving a payment from a customer on account: A) increases stockholders' equity. B) has no effect on total assets. C) decreases stockholders' equity. D) decreases liabilities.
B
) The normal balance of an account: A) falls on the side where decreases are recorded. B) falls on the side where increases are recorded. C) must be computed after every transaction. D) cannot be computed in a manual accounting system.
B
) The process of copying the information from the journal to the trial balance is: A) called posting. B) not part of the accounting process. C) called journalizing. D) used to prepare the financial statements.
B
) The trial balance is used to determine if: A) total assets equal total liabilities. B) total debits of all the accounts equal total credits of all the accounts. C) total debits of the income statement accounts equal the total credits of the income statement accounts. D) total debits of the balance sheet accounts equal the total credits of the balance sheet accounts
B
) When an expense account is increased: A) an amount is entered on the credit side of the expense account. B) an amount is entered on the debit side of the expense account. C) cash must always be credited. D) stockholders' equity is not affected.
B
) When computing the normal balance of an account: A) salaries expense should have a credit balance. B) accounts payable should have a credit balance. C) equipment should have a credit balance. D) notes payable should have a debit balance.
B
) Which of the following is a business transaction? A) A company signs a contract for services to be provided during the first quarter of the next fiscal year. B) A company pays its employees a year-end bonus. C) A company hires a new marketing manager. D) A company applies for a mortgage that will be used to purchase a new office building.
B
) Which of the following transactions will increase stockholders' equity? A) The company pays a dividend to its shareholders. B) The company issues common stock to new shareholders. C) The company purchases equipment. D) The company makes a payment on account.
B
A bookkeeper forgot to post a credit to Accounts Receivable, but did post the debit part of the journal entry correctly. Then: A) the trial balance would still balance. B) total debits would exceed total credits on the trial balance. C) total credits would exceed total debits on the trial balance. D) total debits and total credits would both be incorrect on the trial balance.
B
A business purchased office supplies of $23,000 by signing a note. The business would: A) debit Supplies for $23,000 and credit Accounts Payable for $23,000. B) debit Supplies for $23,000 and credit Notes Payable for $23,000. C) debit Notes Receivable for $23,000 and credit Supplies for $23,000. D) debit Notes Payable for $23,000 and credit Supplies Expense for $23,000.
B
A company had credit sales of $33,000 and cash sales of $25,000 during the month of May. Also during May, the company paid wages of $22,000 and utilities of $8,000. It also received payments from customers on account totaling $5,800. What was the company's net income for the month? A) $25,000 B) $28,000 C) $58,000 D) $88,000
B
All of the following accounts would be considered assets EXCEPT for: A) Cash. B) Retained Earnings. C) Prepaid Expenses. D) Notes Receivable.
B
An account will have a debit balance if: A) the amount of the credits exceeds the amount of the debits. B) the amount of the debits exceeds the amount of the credits. C) the account has more debit entries than credit entries. D) it is a liability account.
B
Entries are listed in the journal: A) alphabetically. B) chronologically. C) with income statement accounts first and then balance sheet accounts. D) in order of importance.
B
Jenkins Company began business in June when stockholders invested $85,000 in the business, which in turn issued its common stock to them. Jenkins Company then purchased a building for $43,000 cash and inventory for $24,000 cash, performed services for clients for $15,000 cash, purchased supplies for $7,000 cash, and paid utilities of $4,000 cash. What is the amount of cash at the end of June? A) $18,000 B) $22,000 C) $33,000 D) $46,000
B
The dollar amounts listed on the trial balance are obtained from the: A) beginning balances in the ledger accounts. B) ending balances in the ledger accounts. C) last period's balance sheet and income statement. D) this period's balance sheet and income statement.
B
The entry to record the purchase of supplies on account includes a credit to: A) Supplies. B) Accounts Payable. C) Supplies Expense. D) Cash.
B
To compute the ending balance of retained earnings: A) the beginning balance in retained earnings will be negative for a new business. B) net loss for the period is subtracted from the beginning balance of retained earnings. C) dividends are added to the beginning balance of retained earnings. D) common stock sold during the period is added to the beginning balance of retained earnings.
B
When a company repays cash that is borrowed from the bank: A) total assets remain the same. B) liabilities are decreased. C) retained earnings is decreased. D) total liabilities remain the same.
B
When listing the accounts on the trial balance, where is the dividends account listed? A) It is not listed on the trial balance. B) After Retained Earnings. C) After Service Revenue or Sales Revenue. D) As part of the expense accounts.
B
Which of the following transactions includes a credit to cash? A) the purchase of supplies on account B) the payment of an accounts payable C) the collection of cash from an accounts receivable D) receipt of cash from a customer when service is provided
B
) A company performs services for a client on account. When the company receives the cash from the customer one month later: A) a revenue account is increased. B) a liability account is decreased. C) there is no change in total assets. D) an expense account is decreased.
C
) A company posted a $8,000 debit to Cash as $800. The credit of $8,000 to Service Revenue in the entry was posted correctly. Is the trial balance out of balance? A) No. B) Yes, by $800. C) Yes, by $7,200. D) Yes, by $8,000.
C
) A transaction that includes a debit to an expense and a credit to a liability indicates that: A) revenues increased. B) expenses decreased. C) liabilities increased. D) liabilities decreased.
C
) Accounts with normal debit balances include: A) Cash, Accounts Receivable, and Accounts Payable. B) Cash, Supplies, and Accounts Payable. C) Cash, Accounts Receivable, and Supplies. D) Cash, Supplies, and Notes Payable.
C
) As a practical matter most companies prepare financial statements: A) after every transaction. B) only when both the balance sheet and income statement are affected. C) at the end of the accounting period. D) at the close of every business day.
C
) Decreases in stockholders' equity that result from the cost of operating the business are: A) assets. B) revenues. C) expenses. D) liabilities.
C
) For a new business, the beginning balance of retained earnings equals: A) cash invested by the stockholders. B) beginning balance of the common stock account. C) zero. D) budgeted net income for the first year.
C
) If a posting error has occurred whereby a debit is treated as a credit, then the out-of-balance amount on the trial balance will be evenly divisible by: A) 11. B) 9. C) 2. D) 5.
C
) In order to see a complete transaction in one place, you would need to look at the: A) trial balance. B) ledger. C) journal. D) financial statements.
C
) On August 15, a customer paid $5,000 for services provided a month earlier. The customer was billed on August 1. How does this transaction affect the accounting equation? A) Add $5,000 to Cash and add $5,000 to Service Revenue. B) Add $5,000 to Cash and add $5,000 to Retained Earnings. C) Add $5,000 to Cash and subtract $5,000 from Accounts Receivable. D) Add $5,000 to Accounts Payable and add $5,000 to Cash.
C
) On May 1, a business provided legal services to a client and billed the client $4,000. The client promised to pay the business in one month. Which journal entry should the business record on May 1? A) Debit Cash for $4,000 and credit Service Revenue for $4,000. B) Debit Cash for $4,000 and credit Retained Earnings for $4,000. C) Debit Accounts Receivable for $4,000 and credit Service Revenue for $4,000. D) Debit Accounts Payable for $4,000 and credit Service Revenue for $4,000.
C
) Posting is: A) copying the information from the journal to the trial balance. B) entering the data into the journal. C) copying the information from the journal to the ledger. D) copying the information from the ledger to the financial statements.
C
) Purchasing supplies on account would: A) increase total assets and decrease total liabilities. B) increase total liabilities and decrease total assets. C) increase total assets and increase total liabilities. D) increase total liabilities and increase stockholders' equity.
C
) The Diamond Store began business on June 1. During the month of June, Diamond had cash payments of $8,000. At the end of June, it had a $20,000 cash balance. Based on this information, the cash receipts for the month of June were: A) $12,000. B) $20,000. C) $28,000. D) $36,000.
C
) The ledger: A) is a grouping of all of the balance sheet accounts only. B) is a grouping of all the income statement accounts only. C) contains all the accounts used by a business. D) contains only the permanent accounts used by a business.
C
) The normal balance of an expense account is a ________ because expenses decrease ________. A) debit; assets B) debit; expenses C) debit; retained earnings D) credit; retained earnings
C
) The purchase of equipment, involving a cash down payment and a promise to pay the balance in the future, includes: A) a debit to Cash and a credit to Equipment. B) a debit to Note Payable and a credit to Cash. C) a credit to Cash and a credit to Accounts Payable. D) a debit to Cash and a debit to Note Payable.
C
) When listing the assets in the trial balance, the balance for Accounts Receivable was transposed. The correct balance is $4,100 and the amount was written as $1,400. Is the trial balance out of balance? A) No. B) Yes, by $1,400. C) Yes, by $2,700. D) Yes, by $4,100.
C
) When preparing the financial statements from a spreadsheet that shows the results of a transaction analysis: A) a statement of retained earnings is not required. B) the balance sheet reports the beginning balance of retained earnings. C) assets, liabilities, and stockholders' equity are reported on the balance sheet. D) revenues, expenses, and dividends are reported on the income statement.
C
) When services are performed on account: A) cash is increased. B) revenue will not be recorded until the cash is received from the customer. C) accounts receivable is increased. D) accounts payable is increased.
C
) When working with T accounts, an important rule to remember is: A) when an account is debited, an amount is entered on the right-hand side on the T account. B) an increase to accounts payable will be recorded as a debit. C) to credit an account means to enter an amount on the right-hand side of the T account. D) the debit side of a T account is on the right-hand side of the T account for assets and expenses.
C
) Which account has a normal debit balance? A) Salaries Payable B) Common Stock C) Advertising Expense D) Service Revenue
C
) Which account includes balances in multiple checking accounts? A) Accounts Receivable B) Notes Receivable C) Cash D) Prepaid Expenses
C
) Which accounts are increased by debits? A) Cash and Accounts Payable. B) Salaries Expense and Common Stock. C) Accounts Receivable and Utilities Expense. D) Accounts Payable and Service Revenue.
C
) Which of the following is a CORRECT statement? A) Shareholders' equity is also called proprietorship equity. B) A proprietorship has more than one capital account. C) A partnership has a separate owner's equity account for each partner. D) Retained earnings is the owner's investment in the corporation.
C
A business received the current month's utility bill for $2,125, and immediately paid it. Which journal entry is prepared? A) Debit Accounts Payable for $2,125 and credit Cash for $2,125. B) Debit Utilities Payable for $2,125 and credit Cash for $2,125. C) Debit Utilities Expense for $2,125 and credit Cash for $2,125. D) Debit Operating Expense for $2,125 and credit Accounts Payable for $2,125.
C
A business sold equipment for $44,900 cash. The equipment was purchased one month earlier for $44,900 but the plans for the equipment changed. A) Debit Equipment for $44,900 and credit Cash for $44,900. B) Debit Equipment for $44,900 and credit Retained Earnings for $44,900. C) Debit Cash for $44,900 and credit Equipment for $44,900. D) Debit Retained Earnings for $44,900 and credit Equipment for $44,900.
C
A company declared and paid dividends of $1,300. How does this transaction affect the accounting equation? A) Add $1,300 to Revenue and add $1,300 to Cash. B) Add $1,300 to Dividends and add $1,300 to Accounts Receivable. C) Subtract $1,300 from Retained Earnings and subtract $1,300 from Cash. D) Add $1,300 to Dividend Expense and subtract $1,300 from Cash.
C
A company performed tax services for a client on account. The amount billed to the client was $7,000. How does this transaction affect the accounting equation? A) Add $7,000 to Cash and add $7,000 to Service Revenue. B) Add $7,000 to Cash and add $7,000 to Retained Earnings. C) Add $7,000 to Accounts Receivable and add $7,000 to Retained Earnings. D) Add $7,000 to Accounts Payable and add $7,000 to Service Revenue.
C
A trial balance has which of the following features? A) Totals for balance sheet accounts only. B) Totals for income statement accounts only. C) Totals for all accounts listed in the ledger. D) Accounts are listed in alphabetical order.
C
Accounting transactions are initially recorded in the: A) T-account. B) ledger. C) journal. D) financial statements.
C
Andy Company had a cash balance on May 1 of $27,000. At the end of May, the cash balance has increased to $31,000. During the month of May, Andy received cash of $48,000 from various sources. Based on this information, cash payments for the month of May were: A) $27,000. B) $31,000. C) $44,000. D) $75,000.
C
In order to determine the balance in an account, you must look at the: A) source documents. B) journals. C) ledger. D) book of original entry.
C
On March 31, Baker Company received a bill and paid for advertising costs for the current month. This payment results in a: A) debit to Cash. B) debit to Prepaid Advertising. C) debit to Advertising Expense. D) credit to Advertising Revenue.
C
On May 10, a business collected $4,200 on account. What journal entry is needed on that date? A) Debit Cash for $4,200 and credit Revenue for $4,200. B) Debit Accounts Receivable for $4,200 and credit Revenue for $4,200. C) Debit Cash for $4,200 and credit Accounts Receivable for $4,200. D) Debit Accounts Payable for $4,200 and credit Revenue for $4,200.
C
The Accounts Receivable account for Johnny's Mechanic Shop had a beginning balance of $36,000. During the month, Johnny made sales on account of $46,000. The ending balance in the Accounts Receivable account is $32,000. What are cash collections for the month? A) $36,000 B) $46,000 C) $50,000 D) $82,000
C
The left side of a T-account is always the: A) increase side. B) decrease side. C) debit side. D) credit side.
C
The proper order for the accounting process is: A) posting, transaction occurs, journalizing. B) transaction occurs, posting, journalizing. C) transaction occurs, transaction analyzed, journalizing, and posting. D) transaction occurs, posting, transaction analyzed, journalizing.
C
Transaction analysis and the accounting equation have been used to record several transactions for a company. The transactions are now recorded on a multi-column spreadsheet. When preparing a statement of retained earnings with this spreadsheet, which column would be used? A) Cash B) Accounts Receivable C) Retained Earnings D) Revenue
C
When a business purchases land with a note payable: A) both assets and stockholders' equity are increased. B) assets are decreased and stockholder's equity is increased. C) both assets and liabilities are increased. D) assets are increased and liabilities are decreased.
C
Which of the following is NOT a business transaction? A) A company buys goods on account. B) A company sells land for cash. C) A company fired 10 percent of the employees due to lackluster sales. D) A company borrows money from the bank.
C
Which of the following transactions will increase one asset and decrease another asset? A) the purchase of office supplies on account B) the performance of services on account C) the purchase of equipment for cash D) the performance of services for cash
C
) A chart of accounts: A) is used by an organization to determine the balance in all of their accounts. B) lists all of the accounts of an organization in alphabetical order. C) must be the same for all organizations. D) lists all of an organization's accounts and account numbers.
D
) A company performed services for a customer for cash. This transaction increased assets and: A) decreased stockholders' equity. B) increased liabilities. C) increased expenses. D) increased revenues.
D
) A company purchased supplies of $2,000 on account. How does this transaction affect the accounting equation? A) Add $2,000 to Supplies and add $2,000 to Notes Payable. B) Add $2,000 to Supplies and subtract $2,000 from Cash. C) Add $2,000 to Supplies Expense and add $2,000 to Notes Payable. D) Add $2,000 to Supplies and add $2,000 to Accounts Payable.
D
) A company received $35,000 cash and issued common stock in exchange. How does this transaction affect the accounting equation? A) Add $35,000 to Cash and add $35,000 to Retained Earnings. B) Add $35,000 to Cash and add $35,000 to Revenue. C) Add $35,000 to Dividends and subtract $35,000 from Retained Earnings. D) Add $35,000 to Cash and add $35,000 to Common Stock.
D
) A company received a utility bill for $2,300 and decided to pay it next month due to a shortage of cash. How does this transaction affect the accounting equation? A) Add $2,300 to Utilities Expense and add $2,300 to Cash. B) Subtract $2,300 from Cash and add $2,300 to Accounts Payable. C) Add $2,300 to Accounts Receivable and subtract $2,300 from Retained Earnings. D) Add $2,300 to Accounts Payable and subtract $2,300 from Retained Earnings.
D
) A company received cash in exchange for issuing stock. This transaction increased assets and: A) increased expenses. B) increased revenues. C) increased liabilities. D) increased stockholders' equity.
D
) A partner in Sturm Company purchased a new yacht, for personal use, with his own funds. Sturm Company would: A) debit an asset account. B) credit a revenue account. C) credit a liability account. D) not record the transaction in its books.
D
) A receptionist worked one month and was paid $3,800 on the last day of the month. How does this transaction affect the accounting equation? A) Add $3,800 to Cash and add $3,800 to Accounts Payable. B) Add $3,800 to Accounts Receivable and subtract $3,800 from Cash. C) Add $3,800 to Salary Expense and subtract $3,800 from Retained Earnings. D) Subtract $3,800 from Cash and subtract $3,800 from Retained Earnings.
D
) A record of all the changes in a particular asset during a period of time is found in a(n): A) transaction. B) trial balance. C) prior period's balance sheet. D) account.
D
) An example of a slide-type error is writing: A) $1,300 as $3,100. B) $300 as $600. C) $5,000 as $10,000. D) $500 as $50.
D
) An example of a transposition error is writing: A) $500 as $50. B) $2,000 as $4,000. C) $300 as $600. D) $1,400 as $4,100.
D
) In transaction analysis, revenues and expenses that arise in different transactions are recorded in the ________ column of the accounting equation. A) Multistep B) Common Stock C) Dividends D) Retained Earnings
D
) In transaction analysis, the declaration and payment of dividends is recorded in the ________ and ________ columns of the accounting equation. A) Dividends; Cash B) Expenses; Accounts Receivable C) Expenses; Accounts Payable D) Retained Earnings; Cash
D
) Simmons Company began the month with a balance of $84,000 in Accounts Receivable. An analysis of the account determined that sales on account for the month totaled $113,000. At the end of the month, the balance in Accounts Receivable was $86,000. From this information, it can be determined that Simmons Company had collections from customers on account of: A) $29,000. B) $57,000. C) $115,000. D) $111,000.
D
) The first step in recording a transaction in the journal is: A) determining whether each account is increased or decreased by the transaction. B) copying the information from the journal to the ledger. C) entering the debit side of the journal entry on the left margin and the credit side, which is indented to the right. D) specifying each account affected by the transaction and classifying the account by type.
D
) The normal balance of a revenue account is a ________ because revenues increase ________.
D
) The normal balance of the Accounts Receivable account is a ________ because it is a(n) ________ account. A) credit; liability B) debit; stockholders' equity C) credit; expense D) debit; asset
D
) Two employees worked one week and were paid salaries of $2,500. The journal entry would: A) debit Cash for $2,500 and credit Salaries Payable for $2,500. B) debit Cash for $2,500 and credit Salary Expense for $2,500. C) debit Accounts Payable for $2,500 and credit Salary Payable for $2,500. D) debit Salary Expense for $2,500 and credit Cash for $2,500.
D
) When a company pays an amount it owes a creditor: A) assets are decreased and net income is decreased. B) assets are decreased and liabilities are increased. C) liabilities are decreased and net income is increased. D) assets are decreased and liabilities are decreased.
D
) Which error will be uncovered by a trial balance? A) The bookkeeper recorded the same journal entry three times. B) The bookkeeper forgot to record a journal entry for a large amount. C) The bookkeeper recorded both the debit and credit of a journal entry as $200 instead of $700. D) The bookkeeper recorded a journal entry with a debit of $400 and a credit of $400, as a debit of $400 and a credit of $40.
D
) Which of the following is a CORRECT statement about a chart of accounts? A) It lists the income statement accounts first. B) It can be used to determine the balance in an account. C) It is a tool used by accountants to help prepare the financial statements. D) It lists the balance sheet accounts first.
D
) Which of the following statements regarding a trial balance is TRUE? A) A trial balance may be prepared at any time during the accounting period. B) A trial balance is a list of all accounts used in a business with their balances. C) A trial balance shows whether total debits equal total credits. D) All of the above are true.
D
) Which of the following statements, regarding the rules of debits and credits, is CORRECT? A) An asset is increased by a credit. B) Common stock is increased by a debit. C) A liability is increased by a debit. D) Revenue is increased by a credit.
D
) Which transaction decreases stockholders' equity? A) Inventory was purchased on account. B) Services were performed on account. C) Services were performed and cash was immediately received from the customers. D) Employees worked one week and were paid at the end of the week.
D
) Which transaction decreases stockholders' equity? A) sale of common stock B) cash purchase of land C) total revenues greater than total expenses for the period D) total expenses greater than total revenues for the period
D
) Yellow Company had a balance of $31,000 in Accounts Payable at the beginning of June, and purchased $104,000 of merchandise on account during the month. At the end of June, Yellow's Accounts Payable balance was $29,000. What amount did Yellow pay on account during June? A) $44,000 B) $75,000 C) $104,000 D) $106,000
D
28) If a journal entry includes a debit to Accounts Payable and a credit to Cash: A) Cash will have a credit balance. B) Accounts Payable is increased. C) Cash is increased. D) Accounts Payable is decreased.
D
A business purchased office supplies of $28,000 on account. The business would: A) debit Accounts Receivable for $28,000 and credit Supplies for $28,000. B) debit Supplies for $28,000 and credit Cash for $28,000. C) debit Accounts Payable for $28,000 and credit Supplies for $28,000. D) debit Supplies for $28,000 and credit Accounts Payable for $28,000.
D
A company paid $3,000 for supplies that were purchased earlier in the month on account. How does this transaction affect the accounting equation? A) Add $3,000 to Supplies and add $3,000 to Supplies Expense. B) Add $3,000 to Supplies Expense and subtract $3,000 from Cash. C) Add $3,000 to Supplies Expense and add $3,000 to Cash. D) Subtract $3,000 from Accounts Payable and subtract $3,000 from Cash.
D
If the trial balance does not balance, several steps can be taken to find the error. Which step will probably NOT help you find the error? A) Tracing each account back and forth from the journal to the ledger. B) Divide the out-of-balance amount by 2. C) Divide the out-of-balance amount by 9. D) Divide the out-of-balance amount by 5.
D
Performing services on account: A) decreases both assets and liabilities. B) increases assets and decreases stockholders' equity. C) decreases revenues and decreases stockholders' equity. D) increases both net income and stockholders' equity
D
The debt created by a business when it makes a purchase of inventory on account is a(n): A) revenue. B) account receivable. C) note payable. D) account payable.
D
The purchase of office computers for cash includes a debit to: A) Cash and a credit to Office Equipment. B) Office Equipment and a credit to Accounts Payable. C) Accounts Receivable and credit to Office Equipment. D) Office Equipment and a credit to Cash.
D
The trial balance is used to prepare the: A) balance sheet only. B) income statement only. C) statement of retained earnings only. D) all of the above.
D
To compute ending balance of retained earnings on the statement of retained earnings: A) net loss is added to the beginning balance of retained earnings and dividends that were declared and paid are subtracted from the beginning balance of retained earnings. B) net income and dividends are both added to the beginning balance of retained earnings. C) net loss and dividends are both added to the beginning balance of retained earnings. D) net income is added to the beginning balance of retained earnings.
D
Transaction analysis and the accounting equation have been used to record several transactions for a company. The transactions are now recorded on a multi-column spreadsheet. When preparing a balance sheet with this spreadsheet, which column(s) would be used? A) final balances of asset columns only B) final balances of liability columns only C) final balances of stockholders' equity columns only D) all of the above
D
Transaction analysis and the accounting equation have been used to record several transactions for a company. The transactions are now recorded on a multi-column spreadsheet. When preparing an income statement with this spreadsheet, which column would be used? A) Cash B) Accounts Payable C) Dividends D) Retained Earnings
D
When a company borrows money (cash) from the bank, which type of account(s) is(are) increased? A) asset account only B) retained earnings only C) liability account only D) both asset and liability accounts
D
When posting a journal entry to the ledger, transfer: A) the dollar amount of debits in the journal entry to the appropriate accounts. B) the dollar amounts of credits in the journal entry to the appropriate accounts. C) the name of the person who prepared the journal entry. D) A and B.
D
Which of the following transactions would decrease an asset and decrease stockholders' equity? A) payment of an accounts payable B) performance of a service for a client on account C) borrowing money from the bank for thirty days D) declaration and payment of a dividend to the shareholders
D
