Exam 2: Transaction Analysis

Lucy Morton opened an engineering office and titled the business Engineering Enterprises P.C. During its first month of operations, it completed the following transactions: I. Lucy invested $30,000 in the business, which in turn issued common stock to her. II. The business purchased equipment on account for $6,000. II. The business provided engineering services on account, $10,000. III. The business paid salaries to the receptionist, $1,000. IV. The business received cash from a customer as payment on account $6,000. V. The business borrowed $8,000 from the bank, issuing a note payable. Total liabilities would be:

The financial statements can be prepared from the information on the trial balance.

Cash dividends paid to stockholders will:

ABC Company began business in June when stockholders invested $80,000 in the business, which in turn issued its common stock to them. ABC Company then purchased a building for $40,000 cash and inventory for $20,000 cash, performed services for clients for $10,000 cash, purchased supplies for $5,000 cash, and paid utilities of $2,000 cash. What is the amount of total assets?

When a company borrows cash from the bank:

The balance of an account:

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

The only way to find a transposition error in the trial balance is to go back to the source documents.

Accounts payable is increased with a credit.

All companies must use the same chart of accounts.

An important fact to remember when analyzing the transactions of a company is that:

Record the effects of the following transactions on the accounting equation. After recording the transactions, compute the ending balances of the equation to prove it balances. 1. A business received $10,000 and issued common stock. 2. Paid $2,000 monthly rent for office space. 3. Purchased $3,000 of office equipment, paying cash. 4. Purchased $500 of office supplies on account. 5. Recorded $4,000 of revenue, receiving cash. 6. Performed $1,500 of services on account. 7. Paid utilities expense of $900. 8. Collected cash from a customer on account, $1,000. 9. Borrowed $10,000 from the bank and signed a note payable.

Which of the following is a correct statement?

Journal entries can have more than two accounts as long as the total debits equal the total credits.

Performing services on account:

Which of the following business events would NOT be recorded in a company's accounting records?

Receiving a payment from a customer on account:

Transactions:

A company completed the following transactions during the month of October: I. Purchased office supplies on account, $4,000. II. Provided services for cash, $10,000. III. Provided services on account, $12,000. IV. Collected cash from a customer on account $7,000. V. Paid the monthly rent of $3,000. What was the company's net income for the month?

An account will have a debit balance if: