Exam 2: Transaction Analysis

ABC Company needed money to purchase a new building. They borrowed $20,000 from the Richest Bank and signed a note promising to pay the amount back in three months. The entry to record the loan is:

Muddle Company performs a service for one of its customers and immediately collects the cash. This transaction will:

Which of the following is a correct statement?

Accounting has its own vocabulary and basic relationships. Match the following accounting terms with the corresponding definition or meaning.

A trial balance is one of a company's major financial statements.

The normal balance of a revenue account is a ________ because revenues increase ________.

Generally companies will prepare financial statements:

Which of the following transactions will increase one asset and decrease another asset?

The normal balance of an expense account is a ________ because expenses decrease ________.

Prepaid expenses are an asset.

When cash is paid for utilities:

The double-entry system of accounting records the dual effects on the entity.

To compute the ending balance of retained earnings:

When services are performed on account:

Accounting transactions are initially recorded in the:

A journal entry that debits Cash and credits Accounts Receivable indicates that:

When a revenue account is increased:

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

Which account includes bank account balances?

A trial balance has which of the following features?