Connect 2

When recording a transaction, the debits must always equal the

credits

The equipment account is increased with an entry on the _______ side of the Equipment T-account

debit

The line item, common stock, on the balance sheet results from a ________ activity

financing

Effect on total assets when a company buys a cash register for a cash payment of $1,200

no effect. Equipment is increased and cash is decreased

when a company pays its supplier for amounts owed, its cash and accounts _________ are decreases

payable

accounts payable is increased with an entry on the ______ side of the T-Account

credit

What is the effect of recording the borrowing of $10,000 from a bank on the accounting equation?

1. assets increase 2. liabilities increase

Identify the key activities necessary to start a business

1. purchase assets 2. obtain financing

what are possible effects on the accounting equation when recording a transaction that increases an asset by $100

1. stockholders equity increases by $100 2. an asset decreases by $100 3. a liability account increases by $100

Which transactions are recorded in the accounting system?

both external exchanges and internal events

a company typically receives ______, an asset, when it issues stock to its owners

cash

A company issued 1,000 shares of its stock for $100,000. The increase in the common stock account would be recorded with a

credit

entries are first recorded in the ________ and then the ledger

journal

what measures a company's ability to pay liabilities as they come due in the short run

liquidity

What are investing activities?

purchasing equipment, purchasing land, purchasing company logo

What is an appropriate application of the cost principle regarding land that was purchased 20 years ago and has increased in value?

the land is reported on the balance sheet at its original price

MMM Pizza bought $1500 of supplies on account. What is the effect of recording this transaction on the company's total assets

total assets will increase