Question 1

The purchase of equipment involving a cash down payment and a promise to pay the balance in the future would include:

Accepted Answer

A)  a debit to Cash and a credit to Equipment. 
B)  a debit to Note Payable and a credit to Cash. 
C)  a credit to Cash and a credit to Note Payable. 
D)  a debit to Cash and a debit to Note Payable. 
A)  a debit to Cash and a credit to Equipment. 
B)  a debit to Note Payable and a credit to Cash. 
C)  a credit to Cash and a credit to Note Payable. 
D)  a debit to Cash and a debit to Note Payable.

Question 2

A company received cash in exchange for issuing stock. This transaction increased assets and:

Accepted Answer

A)  increased expenses. 
B)  increased revenues. 
C)  increased liabilities. 
D)  increased equity. 
A)  increased expenses. 
B)  increased revenues. 
C)  increased liabilities. 
D)  increased equity.

Question 3

Increases in stockholders' equity that result from delivering goods or services to customers are:

Accepted Answer

A)  assets. 
B)  revenues. 
C)  expenses. 
D)  liabilities. 
A)  assets. 
B)  revenues. 
C)  expenses. 
D)  liabilities.

Question 4

The payment of salaries to employees would:

Accepted Answer

A)  increase assets and increase liabilities. 
B)  decrease net income and decrease assets. 
C)  increase liabilities and increase net income. 
D)  decrease assets and increase liabilities. 
A)  increase assets and increase liabilities. 
B)  decrease net income and decrease assets. 
C)  increase liabilities and increase net income. 
D)  decrease assets and increase liabilities.

Question 5

A transaction that includes a debit to an expense and a credit to a liability indicates that:

Accepted Answer

A)  revenues increased. 
B)  expenses increased. 
C)  liabilities decreased. 
D)  cash decreased. 
A)  revenues increased. 
B)  expenses increased. 
C)  liabilities decreased. 
D)  cash decreased.

Question 6

The transactions of the Morton Company for the month of November are summarized below:
   REQUIRED:
Answer the following questions about Morton Company:
1. How much are total assets?
2. How much does the business expect to collect from customers?
3. How much does the business owe?
4. How much net income or net loss did Morton Company have for the month of November?

Accepted Answer

1. Total assets are $18,000. Calculation

Question 7

Company B purchased office supplies on account. In recording this transaction:

Accepted Answer

A)  cash would be credited. 
B)  accounts payable would be credited. 
C)  accounts receivable would be credited. 
D)  office supplies would be credited. 
A)  cash would be credited. 
B)  accounts payable would be credited. 
C)  accounts receivable would be credited. 
D)  office supplies would be credited.

Question 8

In a journal entry, the sum of the debits must always equal the sum of the credits.

Accepted Answer

A) True 
 B)False

Question 9

If the credits to an account exceed the debits to the account, the account will have a credit balance.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a correct statement about a chart of accounts?

Accepted Answer

A)  It is used only by service corporations. 
B)  It can be used to determine the balance in an account. 
C)  It is a tool used by accountants to help prepare the financial statements. 
D)  It lists the asset accounts first. 
A)  It is used only by service corporations. 
B)  It can be used to determine the balance in an account. 
C)  It is a tool used by accountants to help prepare the financial statements. 
D)  It lists the asset accounts first.

Question 11

Company Z sells land for the same amount it paid for it three years ago. When the company records this transaction:

Accepted Answer

A)  assets and stockholders' equity are increased. 
B)  one asset is increased and another asset is decreased. 
C)  one liability is increased and another liability is decreased. 
D)  assets are increased and liabilities are decreased. 
A)  assets and stockholders' equity are increased. 
B)  one asset is increased and another asset is decreased. 
C)  one liability is increased and another liability is decreased. 
D)  assets are increased and liabilities are decreased.

Question 12

ABC Company began the month with a balance of $70,000 in Accounts Receivable. An analysis of the account determined that sales on account for the month totaled $110,000. At the end of the month, the balance in Accounts Receivable was $$85,000. From this information, it can be determined that the ABC Company had collections from customers on account of:

Accepted Answer

A)  $15,000. 
B)  $45,000. 
C)  $95,000. 
D)  $115,000. 
A)  $15,000. 
B)  $45,000. 
C)  $95,000. 
D)  $115,000.

Question 13

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

Accepted Answer

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

Question 14

The account title appears at the top of the T.

Accepted Answer

A) True 
 B)False

Question 15

Great Gardens, Inc., had the following transactions during its first month of operations:
May 1 Great Gardens received $20,000 cash and issued common stock to the stockholders.
May 1 Paid the May rent, $1,000.
May 3 Purchased equipment on account for $6,000.
May 5 Purchased gardening supplies for $2,000 on account.
May 8 Performed services for a client and received cash of $1,800.
May 12 Performed services for a client and billed the customer $12,200. The customer promised to pay within 10 days.
May 15 Paid for the equipment purchased May 3 on account.
May 22 Received payment from a customer on account, $12,200.
May 28 Borrowed $20,000 from First National Bank for business use.
May 30 Paid the employee salaries of $3,000 for the month.
May 31 Paid the utility bill of $800.
Required: Record the transactions of the business in a journal. Include an explanation for each entry.

Accepted Answer

The answer of Great Gardens, Inc., had the following transactions...

Question 16

If a posting error has occurred when recording a transaction by posting a debit as a credit, then the out-of-balance amount will be evenly divisible by:

Accepted Answer

A)  11. 
B)  9. 
C)  2. 
D)  5. 
A)  11. 
B)  9. 
C)  2. 
D)  5.

Question 17

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 assets would be:

Accepted Answer

A)  $30,000. 
B)  $37,000. 
C)  $47,000. 
D)  $61,000. 
A)  $30,000. 
B)  $37,000. 
C)  $47,000. 
D)  $61,000.

Question 18

Posting accounting transactions avoids the necessity of journalizing transactions.

Accepted Answer

A) True 
 B)False

Question 19

If a company buys inventory on account:

Accepted Answer

A)  cash would decrease. 
B)  accounts payable would increase. 
C)  net income would increase. 
D)  common Stock would decrease. 
A)  cash would decrease. 
B)  accounts payable would increase. 
C)  net income would increase. 
D)  common Stock would decrease.

The purchase of equipment involving a cash down payment and a promise to pay the balance in the future would include:

A company received cash in exchange for issuing stock. This transaction increased assets and:

Increases in stockholders' equity that result from delivering goods or services to customers are:

The payment of salaries to employees would:

A transaction that includes a debit to an expense and a credit to a liability indicates that:

Company B purchased office supplies on account. In recording this transaction:

In a journal entry, the sum of the debits must always equal the sum of the credits.

If the credits to an account exceed the debits to the account, the account will have a credit balance.

Which of the following is a correct statement about a chart of accounts?

Company Z sells land for the same amount it paid for it three years ago. When the company records this transaction:

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

The account title appears at the top of the T.

If a posting error has occurred when recording a transaction by posting a debit as a credit, then the out-of-balance amount will be evenly divisible by:

Posting accounting transactions avoids the necessity of journalizing transactions.

If a company buys inventory on account:

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

The Income Statement, the Statement of Comprehensive Income, the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

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Exam 2: Transaction Analysis

The purchase of equipment involving a cash down payment and a promise to pay the balance in the future would include:

A company received cash in exchange for issuing stock. This transaction increased assets and:

Increases in stockholders' equity that result from delivering goods or services to customers are:

The payment of salaries to employees would:

A transaction that includes a debit to an expense and a credit to a liability indicates that:

Company B purchased office supplies on account. In recording this transaction:

In a journal entry, the sum of the debits must always equal the sum of the credits.

If the credits to an account exceed the debits to the account, the account will have a credit balance.

Which of the following is a correct statement about a chart of accounts?

Company Z sells land for the same amount it paid for it three years ago. When the company records this transaction:

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

The account title appears at the top of the T.

If a posting error has occurred when recording a transaction by posting a debit as a credit, then the out-of-balance amount will be evenly divisible by:

Posting accounting transactions avoids the necessity of journalizing transactions.

If a company buys inventory on account:

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

The Income Statement, the Statement of Comprehensive Income, the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

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