Chapter 2: Transaction Analysis - Study Plan Practice

An attorney performs services of $1,100 for a client and receives $400 cash with the remainder on account. The journal entry for this transaction would

debit cash, debit accounts receivable, credit service revenue

Indicate the relationships within the statements that link them together

The net income amount on the income statement flows to the statement of retained earnings. The ending retained earnings amount from the statement of retained earnings flows to the balance sheet.

Tenth Investments, Inc., began by issuing common stock for cash of $170,000. The company immediately purchased computer equipment on account for $26,000. Record the first two transactions of the business directly in the T-accounts without using a journal.

Total debits = $196,000 Total credits = $196,000

Lartex, a new company, completed these transactions: 1. Stockholders invested $56,000 cash and inventory with a fair value of $33,000 2. Sales on account, $18,000 What will Lartex's total assets equal? A. $107,000 B. $89,000 C. $56,000 D. $74,000

A. $107,000

Accounts payable had a normal beginning balance of $2,000. During the period, there were debit postings of $400 and credit postings of $800. What was the ending balance? A. $2,400 credit B. $1,600 debit C. $2,400 debit D. $1,600 credit

A. $2,400 credit

A firm's beginning cash balance was $12,000. At the end of the period, the balance was $11, 000. If total cash paid out during the period was $27,000, the amount of cash receipts was A. $26,000 B. $28,000 C. $38,000 D. $39,000

A. $26,000

Accounts receivable will appear on which of the following financial statements? A. Balance sheet B. Income statement C. Statement of retained earnings D. Statement of cash flows

A. Balance sheet

Blake Company completed a consulting job and billed the customer $5,000. The impact on Blake Company from this transaction A. increases assets and increases stockholders' equity B. increases assets and increases liabilities C. increases liabilities and decreases stockholders' equity D. decreases liabilities and increases stockholders' equity

A. increases assets and increases stockholders' equity

All of the following events at a sandwich shop are transactions except A. The accountant for the sandwich shop pays the electric bill B. A representative from the local university contacts the manager of the shop to get a list of catering services C. A customer purchases a sandwich D. A delivery of coffee beans purchased on account from the local roaster is received

B. A representative from the local university contacts the manager of the shop to get a list of catering services

Amounts owed to a company by its customers would be: A. Inventory B. Accounts receivable C. Prepaid expenses D. Accounts payable

B. Accounts receivable

Which statement is false? A. Revenues are increased by credits B. Dividends are increased by credits C. Assets are increased by debits D. Liabilities are decreased by debits

B. Dividends are increased by credits

an investment of cash by stockholders into the business will A. have no effect on total assets B. increase stockholders' equity C. decrease total liabilities D. decrease total assets

B. increase stockholders' equity

Which of the following transactions will increase an asset and increase a liability? A. Paying an account payable B. Purchasing office equipment for cash C. Buying equipment on account D. Issuing stock

C. Buying equipment on account

What is the effect on total assets and stockholders' equity of paying the telephone bill as soon as it is received each month? Total assets; Stockholders' equity A. Decrease; No effect B. No effect; Decrease C. Decrease; Decrease D. No effect; No effect

C. Decrease; Decrease

Which of the following debit and credit rules is correct? A. Decreases in assets and liabilities are credited B. Increases in liabilities and stockholders' equity are debited C. Increases in liabilities and stockholders' equity are credited D. Increases in assets and liabilities are debited

C. Increases in liabilities and stockholders' equity are credited

Where is the transaction first recorded? A. Ledger B. Account C. Journal D. Trial Balance

C. Journal

Receiving cash from a customer on account will A. increase stockholders' equity B. decrease liabilities C. have no effect on total assets D. increase total assets

C. have no effect on total assets

Purchasing computer equipment for cash will A. decrease both total liabilities and stockholders' equity B. increase both total assets and total liabilities C. have no effect on total assets, total liabilities, or stockholders' equity D. decrease both total assets and stockholders' equity

C. have no effect on total assets, total liabilities, or stockholders' equity

Purchasing a building for $80,000 by paying cash of $10,000 and signing a note payable for $70,000 will A. increase both total assets and total liabilities by $80,000 B. decrease total assets and increase total liabilities by $10,000 C. increase both total assets and total liabilities by $70,000 D. decrease both total assets and total liabilities by $10,000

C. increase both total assets and total liabilities by $70,000

A credit entry to an account will A. increase assets B. increase expenses C. increase liabilities D. decrease revenues

C. increase liabilities

Adam Corporation issues stock to Cara Riley in exchange for $24,000 cash. The impact on Adam Corporation's assets from this transaction A. Not enough information is provided to determine the impact on assets B. does not have any impact on assets C. increases assets D. decreases assets

C. increases assets

If a corporation purchases a delivery van for $35,000 cash, the net impact of this transaction will be A. an increase in both assets and liabilities of $35,000 B. a decrease in total assets of $35,000 C. no impact on total assets D. an increase in total assets of $35,000

C. no impact on total assets

What criteria does an event have to meet to qualify as a financial transaction

Can be measured reliably & Has a financial impact on a business

Purchasing a laptop computer on account will A. increase total liabilities B. have no effect on stockholders' equity C. increase total assets D. All of the listed choices are correct

D. All of the listed choices are correct

Identify the asset from the following list of accounts: A. Notes payable B. Retained earnings C. Common stock D. Inventory

D. Inventory

Which of the following is an asset? A. Salary expense B. Common stock C. Service revenue D. None of the listed accounts is an asset

D. None of the listed accounts is an asset

Which of the following transactions will increase an asset and increase stockholders' equity? A. Collecting cash from a customer on an account receivable B. Borrowing money from a bank C. Purchasing supplies on account D. Performing a service on account for a customer

D. Performing a service on account for a customer

Performing a service on account will A. increase stockholders' equity B. increase total assets C. increase total liabilities D. accomplish both a and b

D. accomplish both a and b

Thorpe Corporation purchases a new delivery truck and signs a note payable at the truck dealership for the total cost. The impact of this transaction on Thorpe Corporation A. increases assets and increases stockholders' equity B. increases assets and decreases stockholders' equity C. decreases assets and increases liabilities D. increases assets and increases liabilities

D. increases assets and increases liabilities

A doctor purchases medical supplies of $640 and pays $290 cash with the remainder on account. Te journal entry would be

Debit supplies > Credit Accounts Payable > Credit cash

Name two things that (1) increase the Walt Disney Company's stockholders' equity, and (2) decrease the Walt Disney Company's stockholders' equity

Increase the Walt Disney Company's stockholders' equity: Sale of stock & Net income Decrease the Walt Disney Company's stockholders' equity: Net loss & Dividends

Using the analysis for Dr. Halena Samson, P.C., answer the following: a. How much are total assets? b. How much does the business expect to collect from patients? c. How much does the business owe in total? d. How much of the business's assets does Dr. Samson really own? e. How much net income or net loss did the business experience during its first month of operations?

a. $183,400 b. $4,650 c. $32,800 d. $150,600 e. The business experienced net income of $3,600 during its first month of operations

Briefly explain how the Merryvale and Belleville data relate to each other

a. The $39,000 for medical exams is an expanse for Merryvale and revenue for Belleville b. The $26,000 check from Merryvale is a cash payment for Merryvale and a cash receipt for Belleville c. The $13,000 amount due to Belleville from Merryvale is an account payable for Merryvale and an account receivable for Belleville

Tustin's catering began with cash of $15,000. Tustin then bought supplies for $1,700 on account. Tustin paid $7,000 for equipment. Answer these questions. a. How much in total assets does Tustin have? b. How much in liabilities does Tustin owe?

a. Tustin has $16,700 in total assets b. Tustin owes $1,700 in liabilities