Question 1

When a company borrows cash from the bank:

Accepted Answer

A) total assets remain the same. 
B) liabilities are increased. 
C) retained earnings is decreased. 
D) total liabilities remain the same. 
A) total assets remain the same. 
B) liabilities are increased. 
C) retained earnings is decreased. 
D) total liabilities remain the same.

Question 2

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:

Accepted Answer

A) credit to Land. 
B) debit to Land. 
C) debit to Accounts Payable. 
D) credit to Accounts Receivable. 
A) credit to Land. 
B) debit to Land. 
C) debit to Accounts Payable. 
D) credit to Accounts Receivable.

Question 3

A company had credit sales of $33,000 and cash sales of $23,000 during the month of May. Also during May, the company paid wages of $26,000 and utilities of $12,000. It also received payments from customers on account totaling $5200. What was the company's net income for the month?

Accepted Answer

A) $23,000 
B) $18,000 
C) $56,000 
D) $94,000 
A) $23,000 
B) $18,000 
C) $56,000 
D) $94,000

Question 4

For a new business, the beginning balance of retained earnings equals:

Accepted Answer

A) cash invested by the stockholders. 
B) beginning balance of the common stock account. 
C) zero. 
D) budgeted net income for the first year. 
A) cash invested by the stockholders. 
B) beginning balance of the common stock account. 
C) zero. 
D) budgeted net income for the first year.

Question 5

Common stock and retained earnings are increased with debits.

Accepted Answer

A) True 
 B)False

Question 6

When listing the accounts on the trial balance, list the ________ accounts first and then the ________ accounts.

Accepted Answer

A) income statement; cash flow statement 
B) asset; liability 
C) income statement; balance sheet 
D) revenues; stockholders' equity 
A) income statement; cash flow statement 
B) asset; liability 
C) income statement; balance sheet 
D) revenues; stockholders' equity

Question 7

Which account has a normal debit balance?

Accepted Answer

A) Salaries Payable 
B) Common Stock 
C) Advertising Expense 
D) Service Revenue 
A) Salaries Payable 
B) Common Stock 
C) Advertising Expense 
D) Service Revenue

Question 8

Receiving a payment from a customer on account:

Accepted Answer

A) increases stockholders' equity. 
B) has no effect on total assets. 
C) decreases stockholders' equity. 
D) decreases liabilities. 
A) increases stockholders' equity. 
B) has no effect on total assets. 
C) decreases stockholders' equity. 
D) decreases liabilities.

Question 9

The journal is the book of original entry.

Accepted Answer

A) True 
 B)False

Question 10

The entry to record the purchase of supplies on account includes a credit to:

Accepted Answer

A) Supplies. 
B) Accounts Payable. 
C) Supplies Expense. 
D) Cash. 
A) Supplies. 
B) Accounts Payable. 
C) Supplies Expense. 
D) Cash.

Question 11

A company omitted a journal entry to record service revenue of $13,000 on account. Is the trial balance out of balance?

Accepted Answer

A) No. 
B) Yes, by $13,000. 
C) Yes, by $26,000. 
D) Yes, by an indeterminate amount. 
A) No. 
B) Yes, by $13,000. 
C) Yes, by $26,000. 
D) Yes, by an indeterminate amount.

Question 12

A partner in Sturm Company purchased a new yacht, for personal use, with his own funds. Sturm Company would:

Accepted Answer

A) debit an asset account. 
B) credit a revenue account. 
C) credit a liability account. 
D) not record the transaction in its books. 
A) debit an asset account. 
B) credit a revenue account. 
C) credit a liability account. 
D) not record the transaction in its books.

Question 13

Timothy Company has the following trial balance at December 31, 2017:
   Prepare a balance sheet at December 31, 2017. Include a proper heading.

Accepted Answer

Timothy Company
Balance Sheet
December 3

Question 14

The difference between the total credits and the total debits is the balance in the account.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements regarding a trial balance is TRUE?

Accepted Answer

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. 
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.

Question 16

In order to determine the balance in an account, you must look at the:

Accepted Answer

A) source documents. 
B) journals. 
C) ledger. 
D) book of original entry. 
A) source documents. 
B) journals. 
C) ledger. 
D) book of original entry.

Question 17

A company declared and paid dividends of $1800. How does this transaction affect the accounting equation?

Accepted Answer

A) Add $1800 to Revenue and add $1800 to Cash. 
B) Add $1800 to Dividends and add $1800 to Accounts Receivable. 
C) Subtract $1800 from Retained Earnings and subtract $1800 from Cash. 
D) Add $1800 to Dividend Expense and subtract $1800 from Cash. 
A) Add $1800 to Revenue and add $1800 to Cash. 
B) Add $1800 to Dividends and add $1800 to Accounts Receivable. 
C) Subtract $1800 from Retained Earnings and subtract $1800 from Cash. 
D) Add $1800 to Dividend Expense and subtract $1800 from Cash.

Question 18

The debt created by a business when it makes a purchase of inventory on account is a(n):

Accepted Answer

A) revenue. 
B) account receivable. 
C) note payable. 
D) account payable. 
A) revenue. 
B) account receivable. 
C) note payable. 
D) account payable.

Question 19

When listing the assets in the trial balance, the balance for Accounts Receivable was transposed. The correct balance is $2100 and the amount was written as $1200. Is the trial balance out of balance?

Accepted Answer

A) No. 
B) Yes, by $1200. 
C) Yes, by $900. 
D) Yes, by $2100. 
A) No. 
B) Yes, by $1200. 
C) Yes, by $900. 
D) Yes, by $2100.

Question 20

A company did not record the receipt and payment of an utility bill for $2200. Is the trial balance out of balance?

Accepted Answer

A) No. 
B) Yes, by $2200. 
C) Yes, by $4400. 
D) Yes, by an indeterminate amount. 
A) No. 
B) Yes, by $2200. 
C) Yes, by $4400. 
D) Yes, by an indeterminate amount.

When a company borrows cash from the bank:

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 company had credit sales of $33,000 and cash sales of $23,000 during the month of May. Also during May, the company paid wages of $26,000 and utilities of $12,000. It also received payments from customers on account totaling $5200. What was the company's net income for the month?

For a new business, the beginning balance of retained earnings equals:

Common stock and retained earnings are increased with debits.

When listing the accounts on the trial balance, list the accounts first and then the accounts.

Which account has a normal debit balance?

Receiving a payment from a customer on account:

The journal is the book of original entry.

The entry to record the purchase of supplies on account includes a credit to:

A company omitted a journal entry to record service revenue of $13,000 on account. Is the trial balance out of balance?

A partner in Sturm Company purchased a new yacht, for personal use, with his own funds. Sturm Company would:

Timothy Company has the following trial balance at December 31, 2017: Prepare a balance sheet at December 31, 2017. Include a proper heading.

The difference between the total credits and the total debits is the balance in the account.

Which of the following statements regarding a trial balance is TRUE?

In order to determine the balance in an account, you must look at the:

A company declared and paid dividends of $1800. How does this transaction affect the accounting equation?

The debt created by a business when it makes a purchase of inventory on account is a(n):

When listing the assets in the trial balance, the balance for Accounts Receivable was transposed. The correct balance is $2100 and the amount was written as $1200. Is the trial balance out of balance?

A company did not record the receipt and payment of an utility bill for $2200. Is the trial balance out of balance?

The Financial Statements

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets, Natural Resources, Intangibles

Long-Term Investments the Time Value of Money

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, Statement of Comprehensive Income

The Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 2: Transaction Analysis

When a company borrows cash from the bank:

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 company had credit sales of $33,000 and cash sales of $23,000 during the month of May. Also during May, the company paid wages of $26,000 and utilities of $12,000. It also received payments from customers on account totaling $5200. What was the company's net income for the month?

For a new business, the beginning balance of retained earnings equals:

Common stock and retained earnings are increased with debits.

When listing the accounts on the trial balance, list the ________ accounts first and then the ________ accounts.

Which account has a normal debit balance?

Receiving a payment from a customer on account:

The journal is the book of original entry.

The entry to record the purchase of supplies on account includes a credit to:

A company omitted a journal entry to record service revenue of $13,000 on account. Is the trial balance out of balance?

A partner in Sturm Company purchased a new yacht, for personal use, with his own funds. Sturm Company would:

Timothy Company has the following trial balance at December 31, 2017: Prepare a balance sheet at December 31, 2017. Include a proper heading.

The difference between the total credits and the total debits is the balance in the account.

Which of the following statements regarding a trial balance is TRUE?

In order to determine the balance in an account, you must look at the:

A company declared and paid dividends of $1800. How does this transaction affect the accounting equation?

The debt created by a business when it makes a purchase of inventory on account is a(n):

When listing the assets in the trial balance, the balance for Accounts Receivable was transposed. The correct balance is $2100 and the amount was written as $1200. Is the trial balance out of balance?

A company did not record the receipt and payment of an utility bill for $2200. Is the trial balance out of balance?

The Financial Statements

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets, Natural Resources, Intangibles

Long-Term Investments the Time Value of Money

Liabilities

Stockholders Equity

Evaluating Performance: Earnings Quality, the Income Statement, Statement of Comprehensive Income

The Statement of Cash Flows

Financial Statement Analysis

Filters

When listing the accounts on the trial balance, list the accounts first and then the accounts.